Oct 11 - Global Depop, Big Math, Corporate welfare, Palmyra, 1st Nobel for AI, Change Leadership

🎧 Listen to this on the S3T Podcast!

In this Edition of S3T:

• 🚀 Change Leadership Learning Series - Segment #1: Understanding why drives faster learning and deeper value. Learn why Change Leadership is the most 21st crucial skillset of the 21st Century.
• 🇺🇸 US Economic Strength: The US economy added 254K jobs in September, surpassing forecasts, with a healthy 4% rise in average hourly earnings YoY. But consumer sentiment is driven by other factors.
• 📈 Stock Market Highs: Dow & S&P 500 hit new record highs, reflecting economic resilience in the US.
• 🌍 Global Economic Struggles: Germany and Saudi Arabia are near recession, while venture capital startup exits are at their lowest since 2009.
• 👶 Global Depopulation Trends: Many regions face declining birth rates, with Asia and Europe significantly below replacement levels.
• 🌱 US & Sub-Saharan Africa Exception: The US resists the global depopulation trend through higher fertility rates and skilled immigration; Sub-Saharan Africa faces challenges in productivity and health.
• 🧬 AI Breakthroughs: AlphaFold 3 won the 2024 Chemistry Nobel Prize, aiding in protein structure prediction and driving new research and job creation.
• 🌍 AI Expansion: OpenAI's international growth includes new offices, reflecting a strategic focus on regulatory challenges and global reach.

Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice, and no offers for securities or investment opportunities are intended. Mentions should not be construed as endorsements. Authors or guests may hold assets discussed or may have interests in companies mentioned.

US is a bright spot in the world economy

The US economy added 254K jobs in September, way above forecast of 150K while the headline inflation rate came in at 2.4%. Meanwhile average hourly earnings is up a healthy 4% over this time last year and this week the Dow & SP500 hit new record highs.

See also BLS Average Hourly Earnings by Industry.

The rest of the world is not faring so well: Germany is slipping further into a recession, even Saudi Arabia is barely above recession territory.

Can the good news in the US economy translate into more positive consumer sentiment?

I think it can and will if we can take more thoughtful approaches to evolving the economy and enabling financial innovation. Consumer sentiment measures are expected to slightly improve (scheduled for Fri 10am Oct 11).

If you've been reading S3T you're familiar with the key pieces of feedback that leading economists, financial innovators and founders have regarding the need for more equitable finance, better economic measures and more effective ways to help families and individuals.

Capitalism for working families, socialism for corporations & the rich

In short: If you're in the upper 5 or 10% of wealth holders, the current status quo cradles and protects you in a wonderfully socialist welfare state specially tuned to meet all the needs and preferences of the rich. If you're the other 95% you get to live under a strict regimen of capitalism.

Zero sum game, full on competitive capitalism:

• Families hoping to live in safe neighborhoods have to compete with private equity firms buying houses as investments.
• Public school families compete with charter school families for education,
• Voters compete with giant companies for the ear of their elected representatives

Unfortunately, in America today, we’ve flipped things:

• We have socialism for companies—corporate bailouts, tax breaks, subsidies
• We force families to live in an underfunded Hunger-Games-version of capitalism that sputters along on what's left after the rich have taken their share...where every aspect of survival has an unaffordable price.

We shield corporations from failure, while leaving families to fend for themselves in a ruthless market, as their household medical debt hits all time highs and retirement ages push back further and further. One group gets boost after boost into higher and higher echelons of wealth, while the other group is taught that even hoping for an equal playing field is shameful and un-American.

This is something we all should be learning about, voting about and talking about with our elected officials before and after the election.

VC Startup Exits worst since 2009

70% of exits (where investor are supposed to realize the return on their original investment) have been negative since 2022, sharply down from the previous average of 58% per Pitchbook's Q3 analysis.

This appears to be the ongoing aftermath of the "mass extinction" correction as the era of easy money came to a close. The general consensus seems to be that during that time, a lot of startups got funded that in ordinary times might not have been funded. And now that's starting to unwind.

Global depopulation trends worsen but there are 2 exceptions (the US is 1 of them)

Economists have long noted the potential for world population growth to start to decline somewhere in near the 22nd century based on UN analysis of long term population trends. Now this new Foreign Affairs piece, Nicholas Eberstadt takes a more recent look at the trends:

• Two thirds of the world live in sub-replacement nations - where the birth rate is not keeping up with the death rate.
• Asian nations are significantly below replacement rates: 50% below in China, 65% in South Korea.
• Latin American birth rates are plunging as well: 1.8 births per woman in 2024 - a sharp drop from previous times.
• Russia: below replacement rate since the 1960s, with 17m more deaths than births since the Soviet Union collapse.
• The EU averages 30% below replacement rates.

The lone exceptions: Sub Saharan Africa and the US. The US is so far resisting the depopulation trend overtaking much of the rest of the world due to 2 factors:

• Comparatively high fertility levels for a rich nation higher than most Asian and all European states.
• Steady inflows of skilled immigrants from restaurant workers to IT engineers.

The primary challenges for these 2 exceptions:

• Sub Saharan Africa - worker upskilling & productivity along with health system improvements needed for basic population sustenance.
• US - national unity & improved teamwork needed to drive continued innovation leadership

More learning: Edward Conrad curates global population trend materials

Alphafold wins Nobel prize and illustrates positive AI outcome

The 2024 Chemistry Nobel prize was awarded for an AI breakthrough - a first.

• The AI model is trained on the libraries of protein data including the Protein Data Bank.
• Has given researchers an irreplaceable tool for predicting protein structures and unlocking new insights for safe vaccines and treatments, and even designing entirely new proteins.

In addition researchers note the breakthrough has helped to create more jobs, rather than eliminate them. Explore further: Google DeepMind's AlphaFold page.

AI for real world tasks - smaller competitors

Writer's Palmyra X 004 takes a (temporary?) lead in the competition for AI External Function Calling - where an AI agent interacts with external systems or tools to accomplish real world tasks. Notable:

• Palmyra's is a smaller model (150b parameters) - suggesting there is plenty of room in this competition for smaller players.
• The model is available via several access options including API and AWS Sagemaker.

Related: Track the competition for External Function Calling on the Berkeley Function-Calling Leaderboard.

OpenAI positions for international growth

OpenAI announces new offices in 5 locations: NY, Seattle, Paris, Brussels and Singapore. 2 more locations in Europe (they are already in London and Dublin) is interesting given the advanced regulatory frameworks coming out of the EU.

AI & Big Math

Terrence Tao recently gave this talk about the potential of human-AI collaboration in frontier math (Youtube) - in part by transforming the process writing and verifying formal proofs.

Change Leadership Learning Series - Learning Segment #1 :

🗺️ Why Change Leadership is the most important skillset of the 21st century

Welcome to your weekly learning segment on Change Leadership! Today we are starting with an important foundation: The WHY of change leadership.

Need to know why

In my experience helping people learn new skills—whether transitioning to new ones or upgrading old ones—those who understood why it mattered always learned faster and gained more value. People who aren't convinced of the importance and relevance of something will take longer to learn it, and longer to get value from it. So for our first learning segment we want to convey why change leadership is so important.

What you'll learn in this first learning segment:

• Change Leadership is the most important skillset of the 21st century, because the world is accelerating, the stakes are higher, and unintentional or misguided change can have devastating impacts. 
• The world needs leaders who are committed to learning how to drive intentional beneficial change in the context of the 21st century. This calls for a blend of expertise (we talk about what that blend is)
• Not all change is good. There are different kinds of change. Much of the change occurring today is unwanted, or bringing unwanted consequences. How does beneficial change happen? (we'll cover that)
• Change leadership skills are critical for driving intentional change on every level - change on a personal level, organizational change, as well as macro / national / global change.

🚀 Ready? Go here to start Learning Segment #1

View entire curriculum here.

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