Longreads

• Dan Wang's annual letter is always required reading on China and the US. One highlight: "Beijing is hunkering down for long-term competition, and I think it’s time for the US to get more serious." And another: "The modal piece of commentary on China focuses mostly on the country’s mistakes and weaknesses. In my view, much of this type of opinion is both useless and dangerous." This is incredibly important—people have been writing about the imminent collapse of China's system for decades, so the value-adding question to answer is why China doesn't collapse.

• Joseph Politano: Are Rising Corporate Profit Margins Causing Inflation? A good data-driven look. In a twenty trillion dollar economy with trade and financial flows, it's very hard for any single variable to be the main contributor to a broad economic measure. Sure, you can look at Covid's impact on Q2 2020 GDP—but can you disaggregate the economic impact of the disease, the regulatory response, and the media response? Usually, the best we can get is a noisy directional model.

• Ben Adam on working at Amazon for ten months; this is a very valuable kind of review, because he talks about both how Amazon works and why it didn't work for him. (Disclosure: I'm long AMZN.)

• Emma Boyde at the FT on why exchange-traded funds didn't break down in March of 2020. The main answer: there were enough humans in the loop. Automation is powerful, but it's a complement to human judgment, not a complete substitute.

• Alan Patterson at EE Times on culture clashes between American workers and Taiwan Semiconductor Manufacturing: TSM is not just an impressive collection of capital assets, but an impressive institution with valuable intangibles. Those intangibles are hard to transmit (and, as other companies have found, very hard to restore once they're gone).

Books

Back from a long break, which meant lots of reading.

• The Burgundians: A Vanished Empire: Burgundy was an independent political entity from roughly 411 to 1477, covering land that's now France, Belgium, the Netherlands, Luxembourg, and a little bit of Germany and Switzerland. Part of what makes them interesting is that their monarchs competed with the French for cultural cachet, and had the budget to do so thanks to the wealth of the low countries. This book ranges over political history and art history, with some great descriptions of decadent parties. One of the perks of enjoying historical strategy games is that there's a lot of lore.

• Capital Allocation: The Financials of a New England Textile Mill 1955 - 1985 : You can probably guess which textile mill it is. This book is about early Berkshire Hathaway financial history, and mostly exists to answer the important question of how the company achieve escape velocity: if textiles were a capital sink, how'd they find the cash to start investing in businesses that weren't!? The book goes into great detail on this—if you've ever faulted a business book for not having enough financial statements, you'll love it.

• The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley: A very thoroughly-researched look at PayPal from its birth through the sale to eBay. Parts of this story have been told before (see The PayPal Wars and the Levchin chapter of Founders at Work), but this book has unique details, and manages to tell a great story without being locked into a single narrative. You can listen to my interview with the author, Jimmy Soni, here.

• Dealing With an Ambiguous World: Big countries can't afford to be honest in foreign policy, but small ones can't afford self-deception. This book is a very enjoyable collection of essays from an often-cantankerous retired Singaporean diplomat, who has to be realistic about China and the United States. (Recommended by Cedric of Commonplace.

• We Are the Nerds: The Birth and Tumultuous Life of Reddit, the Internet's Culture Laboratory: Reddit feels like an inevitable company now, but this book makes it clear that they came very close to failure repeatedly—including a period after their acquisition when the company's headcount dropped to two. One interesting about Reddit is that it has broad cultural influence because it's big, but also has significant subcultural influence since it's such a common default hangout for so many different groups.

Open Thread

• Drop in any links that might be of interest to Diff readers.

• And a question to get things started: will Covid-response debates become endemic to politics at the same time that Covid is becoming endemic generally? i.e. will it remain a live political issue for a long time after the hospitalization and death numbers come down?

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Diff Jobs

Some interesting jobs from companies hiring within the Diff network:

• A fintech company is looking for a head of capital markets who can help investors understand a new kind of credit asset. (Bay Area)

• A company fixing the venture funding process is looking for engineers with Python and React experience. (Remote)

• Several of our companies are looking for BD/Sales people, including firms in crypto, investment research, and other areas. (Multiple locations, including remote.)

• A London-based fintech is building a digital bank for SMBs in an emerging market. They're looking for product people. (London)

• A fintech company is looking for an execution trader with software skills who can help them implement systematic trading strategies.

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