You Have to Own

☀️ Happy Friday! Earlier this week, Premium Subscribers received the latest fragments from After Office. This week's batch focuses on World War II's impact on suburbanization, the shift in employment away from cities, and an economic theory that explains competition between locations.

An audio version of this article is available below and on Spotify, Apple Podcasts, and beyond.

"Capital has increasing leverage in the world. It already has a lot. But it will have much more." This is not a quote from Karl Marx. It's a quote from Sam Altman, the founder of OpenAI and creator of ChatGPT. In an interview with Bari Weiss, Altman added:

"Over time, the shift of leverage from labor to capital as technology continues gets more and more extreme, and that's a bad thing. And I can imagine technology like AI pushing that even further."

Altman was alluding to a broader trend that has been ongoing since the beginning of the industrial revolution. Those who own the machines gain more power than those who operate them and consume their products. In the 20th Century, the shift in power was moderated by the introduction of workers' rights and the welfare state. One reason is the fact that owners of capital remained dependent on millions of laborers to produce their ware and, perhaps more importantly, to fight in wars.

But as production and warfare become less dependent on labor, it's hard to see what would limit the balance of power to tip further toward the capital. It's not clear how things will unfold, but one thing is clear: You need to be on the side of capital.

Historically, "regular people" did so by maintaining a corporate job and  investing their savings in stocks, and owning their homes. In the future, maintaining a corporate job and saving money may become increasingly challenging. But the good news is that there will be new ways to accumulate capital. To accumulate capital, you don't have to own a machine or a piece of land. You can also produce and own intellectual property or even a mailing list with an audience. Or you can invest in someone else who does.

I wrote previously about the possibilities of investing directly in people or in fragments of intellectual property. Recent advances in AI render these ideas more viable and crucial. There are many ways to think about the future, so let me propose another: Look for ways to enable individual people to accumulate capital. Make it easier for people to own a piece of ideas and projects.

In the past, rich people and "regular" people invested in completely different things. This, too, is changing. It seems like the main difference these days is not what people invest in but when. Rich people invest early — before a company launches its first product and before a building is built. Everyone else comes along later once a lot of the value has been created and the project has been "derisked."

To get a chance at accumulating capital, "regular" people will have to invest earlier — to take more risk. To overestimate the probability of low-probability outcomes. At the same time, we need to assume that most of our bets will fail. "This may seem obvious, but it contrasts with the assumptions that guided our parents and grandparents when they purchased a home in 1950 or invested in a few shares of General Electric. They invested in "sure things" to secure their future. We need to invest in unsure things — not just in order to get rich, but in order to have a chance to own anything at all.

We need whole new approaches to savings and investment for retirements and whole new models to enable people to own a piece of the things and ideas that their labor produces. There have been experiments to that effect over the past few decades — from employee stock option plans to tokenized communities. But we need many more experiments. And we need governments to wake up to this need and encourage more experiments of this kind.

That's it for this week. I am in Israel, enjoying the sunshine and gearing up for tomorrow's protest against Netanyahu's efforts to make a flawed democracy even worse.

Have a great weekend.

Best,