Longreads

• Forbes profiles Peak6 and Apex Clearing; Peak6 started out in derivatives trading, ran into trouble with their nearly-insolvent clearing company, and ended up acquiring it in order to offer clearing services to other fast-growth companies. In finance, there seems to be a tendency for the companies that are good at engineering to be more agile about moving to parts of the supply chain where they have a bigger competitive advantage. When investing is a systematic discipline, the skillset is more translatable to other things adjacent to it.

• Rohit at Strange Loop Canon writes about how some small teams can quickly learn to build a nuclear weapon, while larger and better-funded ones can forget how to. Especially interesting is the riff on poaching talent but not being able to use it, and on the low ROI of industrial espionage. This implies that a distinct company culture can be a particularly effective defensive tool; the people who thrive in a particular company culture are less likely to succeed anywhere else.

• Estimating the cost of technical debt: this paper argues that states whose unemployment benefit systems were written in COBOL caused delays in unemployment benefits with an aggregate GDP impact of $215bn in current dollars. (I have written before on the case for either subsidizing or banning COBOL.) (Via Marginal Revolution.)

• Casey Handmer on why Starship is a big deal. If going to space was in some sense worth it at the old cost structure, how much more worthwhile is it when the cost drops by orders of magnitude?

• Scholars Stage has a great meditation on the two Bush presidencies: the GHWB administration had numerous foreign policy triumphs, GWB had many failures, and the people in charge were often exactly the same.

Books

• Vaclav Smil, Natural Gas: Fuel for the 21st Century: Peter Zeihan has gotten a lot of mileage out of analyzing economics and geopolitics by paying attention to actual geography—as it turns out, soil, rainfall, mountain ranges, and natural resource deposits are a big deal, and ignoring them is perilous. Vaclav Smil has a sort of twist on this: the book is about the history of, economics of, and utility of natural gas, and a recurring theme is that Smil defaults to thinking in terms of chemical reactions. Different mental models come in and out of favor over time (Zeihan-style thinking was pretty unfashionable in the 90s, for example), and my guess is that the chemistry-fluent thinkers have a good decade ahead of them as more and more decisions start with Fermi estimates of emissions impacts.

Open Thread

• As always, share any links that Diff readers would enjoy.

• In light of yesterday's riff on Meta, let's talk about the Metaverse: who has a head start (besides Roblox), who is investing the most (besides Meta), who gets the most spillover benefits (besides Nvidia—the demand for triangles that refresh 60 times a second will keep on exploding)?

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