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Exchange: Stewart and Morgan on the Polycrisis

VettaFi Financial Futurist Dave Nadig assembled a panel that was the talk of the Exchange, which you can see here.

Evan Harp got to sit down with two people from the panel, Tumelo’s co-founder Georgia Stewart and KCP Group’s Director of Communication and Content Tom Morgan to dig deeper into the polycrisis, finding your niche in an increasingly complicated world, and the challenges of changing larger systems.

Evan Harp: Thank you both for joining me. Let me kick this off by just asking how you feel the Future of Finance panel went, what you learned, and what the experience was like being up there because it is the talk of this conference!

Georgia Stewart: Okay, me first. I thought it was great! A really interesting range of people. For me, I learned something on my own panel – I suppose, that’s kind of rare. So that was good to learn something about the Fed, etc.

I thought the debate was good. It’s hard to know when to jump in. You know, I felt like I had a lot to say, but then don’t know how impactful it was going to be and then I ended up not saying anything. [Laughs]

Evan Harp: I would 100% disagree with that. I think you’ve both said some incredible, engaging stuff.

Tom Morgan: You’ve seen the meme with like, Big Bird sitting in a meeting room with surrounded by normal people with laptops, and there’s just Big Bird sitting there amongst everyone else? And there’s another one with like a bunch of special forces guys about to storm a building and one of them is dressed like a clown? That was kind of how I felt on that panel yesterday! [Laughs]

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Everybody’s very serious, people are talking about the Fed and I was like, “if I stick my hand up right now, I don’t think I’m going to add any value to this discussion. I don’t want to be heard just to be heard.” Then in responding right at the end… I actually hold this kind of heretical viewpoint that we need to be thinking about things from, to use the expression I stole yesterday, a right-brain perspective. It always sounds inherently weird within a financial context, but I felt it was actually well-framed by the panel. We had all this non-conventional thinking, but also excellent framing of conventional problems. Then, for a lot of the solutions people say, “in 10 years, I don’t know how this works out.” I feel that you sound a bit weird or pretentious talking about it as a consciousness problem. I’ve just found the longer that I think about it, that seems to be the root level, and consciousness problems only get solved at the individual level.

Georgia Stewart: Right. So, I have questions about that. What does that mean?

Dave tried to pull it back to say, “what do you think it looks like in 10 years?” and we never really got to that. People kept talking about what it can’t look like or what it looks like now, what the problems are now. I had some questions, but I never know whether I have the question because I don’t have enough information and everyone else already has that information or whether I have this question just because I’m young, or whether the question is valid! Why does it work like that? Why does it have to work like that?

It’s kind of hard to pull those things apart. But what do you mean by consciousness?

Tom Morgan: Well, one, I think a gift in finance is being able to ask simple questions because what I’ve realized in 20 years in the business is that the number of people that can answer first principles questions is about six. There are about six people. You ask, “how does that work?” Most people have no idea and they’ve never even bothered to look into it.

That’s why I think someone like Matt Levine at Bloomberg is the best writer in finance because he understands things at a very first principles level and that allows him to be funny and creative with it. Most people, if you think it’s a stupid question, I will always default to asking the stupid question myself, as I’m comfortable looking stupid, as you saw yesterday.

Georgia Stewart: If you understand something from first principles though, and Matt Levine does this too, you can be quite skeptical of anything new. Matt’s skeptical of crypto. He’s skeptical of shareholder democracy, he also is not coming up with solutions for how finance should work in 10 years. I don’t think I’ve ever read something that Matt’s written that is solution focused, but he can unpack a problem like no one else.

Tom Morgan: I think that’s an incredibly insightful point. Dave stole the line that I have from the panel yesterday, which is, “diagnosis is table stakes.”

Analytical minds are brilliant at tearing things apart, but they’re very bad at a holistic perspective, like the one that you’re bringing to things through an actually constructive, forward-looking, positive effort.

I think, to answer the question you posed, and it, again, sounds kind of weird and pretentious, but I don’t think there’s any other answer, which is that the polycrisis, as it’s been phrased, has been caused by single point, top-down interventions.

I always think of Chairman Mao’s ”Smash Sparrows” campaign. During the Great Leap Forward, he was like, “alright, sparrows are eating all the grain, let’s kill all the sparrows.” That caused a locust infestation that killed 50 million people. It’s the worst manmade disaster in history, because he was like, “oh, here’s a single point that I’m going to intervene with, and I’m going to do it.” If you look at any aspect of the polycrisis – it has been caused by that! So when you’re like, “Okay, how do we fix that?” We need to bring a more holistic mindset to individuals, and that actually comes explicitly from the right hemisphere.

Evan Harp: I just want to echo that, because it’s a great point and I see it in other things. I have a background as a dog trainer, of all things, because of the dog trainer to finance writer pipeline is alive and well in the year 2023.

And one of the things that I noticed about dog training is people will have an issue with their dog, say it’s jumping on people when they come to visit, or growling at people. In order to diagnose how to fix the problem, I’ll eventually find myself asking questions like, “does the dog eat all the food from his bowl right away or do they leave some behind?” Or, “does the dog pull when on a leash?” None of these questions seem at all related to jumping on people or growling at them, but they are.

Georgia Stewart: We spent a lot of time thinking about this during my university degree. I studied conservation biology and climate change and, as you’re saying, all these systems are interrelated. That Mao example is one of many – humans did this in Australia, like a million times over.

The other level that you look at that is something like “One Health”, where you couldn’t solve the health crisis without also addressing the gender inequality crisis or the climate crisis as well.

All of these things are so interrelated. You can’t get women to care about climate change if women are actually worried about their own safety, or whatever it might be because you don’t have that hierarchy of needs fulfilled. You need to move people up it in order to get them to care about other stuff.

But, back to your point of a single point, top-down intervention. Does the fact we have a polycrisis and all these things are interrelated mean that you should iteratively approach, maybe scattergun solutions like “let’s try lots of things and see what sticks and not be too worried about the consequences of the things that we try?” Or is there one right thing?

Because I think that’s my argument yesterday – or what I didn’t say that I wish I had said was – even the shareholder democracy thing that we’re trying, it might not be the right way to go about it. I feel like we’re going to win either way, because we either draw a lot of attention to a really important issue and it fails, or we draw a lot of attention to a really important issue and it succeeds in the way that I specifically think it would. Either way, it feels like a step forward, even if my mechanism is not the best.

Evan Harp: A lot of times when I see a new, innovative solution or idea – not just in finance, but in any field – there’s often this dismissive reaction. Any time you challenge the status quo or offer a way to rebuild or reimagine a system, there’s always someone saying “well, people will still figure out how to take advantage of it, so why should we bother doing anything at all?”

Georgia Stewart: Yeah.

Evan Harp: I’m wondering, how do you fight that mindset in other people?

Tom Morgan: I want to introduce an idea that has been playing on my mind for the last couple of months that I think is extraordinarily profound and it takes a little bit of unpacking. It’s basically, if you look at all the causes of the polycrisis, it’s zero-sum games, right? People are just looking for win/lose dynamics everywhere. Because there’s just something in us that feels like the time is now short.

If I’m a CEO, I need to be paid a thousand times more than my lowest-paid employee, because I don’t know how long I’m going to be in the job. So, we’re all playing single-iteration, zero-sum games, right?

The cure to that is, by definition, a positive sum game.

What that actually is, is the coolest idea ever. I took this from a guy called Brett Andersen, who wrote one of the best essays I read last year, which is basically what you do is you find a niche that you can occupy that you intrinsically enjoy, that precisely serves the goals of the world. So, you find where what you can do, the left hemisphere, meets what the world reacts to, the right hemisphere; and it will react through things like synchronicities, and coincidences, you will just enjoy it, and the world will give you what you need.

It’s a very iterative, incremental process. The reason why this defeats all the most nihilistic aspects of the polycrisis is that, if you become highly aligned with the system, your ability to influence it on a completely nonlinear basis, increases exponentially. We’re all familiar with the idea of the sand pile effect or the butterfly in the typhoon., right? Yeah, we have infinitely more agency than either of those things. Yet, for some reason, we discount our ability to have this enormous effect. The fact is, is that if you align by following information that is very specific to your own natural gifts, and then you get the reward from the system, those people have just immensely positive effects on the system, they might or may not even be able to see what that positive effect is in a cause and effect way.

It just will happen that things will unfold. The Taoists in China knew this several thousand years ago and they talked about people who’ve just come to occupy their niche, who just thrive in life. It’s a very unusual spiritual philosophy. Now, you’re going to be hyper charismatic, people are going to flock to you, you’re going to be really successful, but in a way that’s completely aligned with the system – and that’s what beats the zero-sum game mentality, where it becomes an iterated game but you also flourish, and I think that’s a really interesting idea. That takes a little bit of explaining and a little bit of mental gymnastics, but I think it’s the direct antidote to the polycrisis. And I think it’s what we’re kind of doing right now.

Georgia Stewart: How do you choose that for everyone else?

Tom Morgan: You don’t have to. I always find that if you try and put your arms around the universe, it’s going to rip them off, right? You do you, you focus on the constant impossible balance of where what you can uniquely do, because of your gifts, meets what the world needs. And then you just don’t worry about anything else.

One of the biggest problems I see in the most in the younger generation, teenagers, is they have this sense of nihilism because they can’t influence anything. They work hard. I also see a lot of people that get to my age in their 40s, and they’ve sacrificed their whole life towards systemic interventions in things like charity and philanthropic work, and then they just get so defeated by the impossibility of it.

Actually, people shouldn’t be only out for themselves, and neither should it be total self-sacrifice. They should be somewhere in the middle, where they can benefit from their niche. I think if you try and be like, “God, there are so many problems.” You can’t solve them.

Georgia Stewart: Yeah, so I actually believe I’m not that far from that. On a personal level, I really enjoy what I do and I really feel like I’m having an impact. I’m making people read and think differently about the way that they are approaching their problems in the fund management industry.

I guess where I get hung up on that is, you’re always told, especially when you’re young, but also just running a startup – to listen to people around you, to seek advice. “What does the market want,” is the main question you are meant to wake up to and answer every morning. If the market is not asking for a better shareholder system – I mean, in some, in some ways it is. Investors are not waking up every morning, throwing money towards a better shareholder democracy – the stewardship system is seriously under invested in.

I think that’s where I see a contradiction, where the advice is actually people telling me that there are a million unintended consequences of changing the system. It’s expensive, it’s difficult, and it might lead to a dead end, or it might lead to something worse than what we have today. That’s constantly what you get thrown out here and the market is not waking up and saying “I really, really, really need to change this.” I mean, some people are, but not the people that are every day operationalizing it. It’s strange to be a startup in that space.

Now, thinking about it, how do you address that? Do you just not listen to people and you’re in your niche, and you think you’re having an effect, so you plow on?

Evan Harp:  That’s an excellent question, and to add to that, what do you do about the people who whose are poisoned by the nihilism of the moment who maybe even have a legitimate grievance, in the case of the younger generation, with the generations prior not spending the time and energy that were needed to address the problems that are going to be that are largely going to fall on them?

Tom Morgan: When I talked yesterday about the call to adventure, and the rejection of the call and the crisis, I think, a slightly heretical view that I think the mental health crisis right now is being caused by this overall nagging sense amongst the younger generation that things are not right.

You know, the pop tart is running out, and we are running out of time. It’s like gas in a mine. They’re the canaries and they’re starting to detect it and that actually makes me feel incredibly positive. I think a lot of the things that we’re seeing in the younger generation – they’re happy internalizing externalities. But I think to answer your question, it’s a really rubbish answer, which is that it’s discernment, right?

I do a much lower-stakes job than you. I’m like a professional, pretentious philosopher, writer person, right? Every time I hit send on an email, I always put a lot of myself in that email. It’s like, you feel like you’ve stripped yourself naked every time you press send with any creative work, right? Then you just wait to get kicked in the nuts. What’s funny is that you get this sense for when people that love you give you feedback, it hits differently, right? You’re like, ah, that really hurts, but it’s right. When people are just taking shots at you, for whatever reason, which doesn’t happen very often, you’re just like, “well, you haven’t read and engaged with my stuff. You don’t really understand it.” I think it’s this spiral-like process where you just get this better and better discernment for the somatic and emotional. I do think the right hemisphere has a role to play, which is like, “is that criticism valid?” And, “do I really believe in my heart that it is? Yes. Okay. Then I’m going to alter course,” because if you aren’t open to feedback, that’s a closed system. You’re going to die.

Georgia Stewart: That’s really smart. It’s hard to know, I suppose. Everyone has an opinion on that. I’ve been speaking specifically about the democratization of stewardship, because 10 years ago, no one cared at all about any kind of stewardship, and then suddenly everyone has an opinion on what we shouldn’t do.

Again, I think, how do we get to a point where we help people find their niche and let them flourish? How do we get to a point where we do know what the solutions are? I mean, Dave calls himself a financial futurist. Are people like him going to divine a solution?

Yesterday, we were happy sitting on a panel and accepting that the market doesn’t make any sense. Because people have to not flourish during their life in order to flourish in retirement, so, for example, some of these social media companies can go on existing, making shareholders money. I’m just sitting there thinking like, that makes no freaking sense at all. Why does someone not change that? Simple because the systems are massive and complex and everyone’s kind of like, “well, you know, it is what it is.”

Tom Morgan: At a corporate level, I spent a long time on ESG, throughout my career, and I always think of the ESG movement as like a really, really terrible restaurant where you can only order from their vegan menu. The problem isn’t that you have to order from the vegan menu, the problem is that you’re in a terrible restaurant.

U.S. capitalism has been optimized for zero-sum games, on a long enough timeframe. I think what’s changed maybe, since the pandemic, is that people have realized, just take supply chains, right? If you’re going to have all of your earnings wiped out every 10 years if you have a supply chain disruption, sustainability goes from like a nice-to-have to a have-to-have. People are understanding that if you want to build things that are enduring, they actually have to have slack in their model in order to survive.

Georgia Stewart: That only applies if your CEO hasn’t just come in after the last disruption and thinks he’s only going to stay for five years.

It feels like all of these problems come back to a timeframe. It seems so simple, that we could solve everything if we just somehow incentivized people, leaders, over longer timeframes. Like CEOs, managers, the government… everyone’s incentivized towards daily or quarterly earnings throughout the whole system. I don’t know if that’s an oversimplification, but it feels like that’s just the answer.

Tom Morgan: No, I think it’s correct. I think that the broad failure of the ESG movement, as I perceive it, is actually brilliant. Because people like alright, like crypto and ESG, were these dumb, incoherent stumblings in the right direction. Just because they failed, doesn’t mean very much in my opinion. They both represent this by decentralizing internalized externalities.

One of the things I believe is that all exploratory moves are unconscious, so you don’t control what you’re interested in, which is a really weird idea. When I look at all of society, with an accelerating interest in the hero’s journey, and the hero’s journey being a specific story about how you rejuvenate society, I know you can predict the future with that. You don’t know where it’s going, but you know that people care about that, and the fact that people have cared so much about crypto and ESG is a hugely positive sign for me that there is an emergent move that’s happening in the right direction.

Now, when? I wish I could say I had certainty. There is a universal pattern in nature, which is hyper weird, which is that you go through the stages of dissonance, a real conflict – zero-sum conflict – that emerges into a broader scale of cooperation, that then goes into a scale of conflict that then emerges in the broader scale of cooperation!

That actually works from atoms to molecules, to bodily tissues, to organs, to humans, to culture. We’ve just been in this constant complexification process – from rocks to the human brain. If you look at individual human societies, we just had a world war and then a very long period of peace. Does that mean we’re going into an even larger world war, but after which nations become obsolete? I don’t know. The direction of travel for all human evolution has been towards greater complexification, and greater complexification brings greater consciousness, right? Greater consciousness brings a greater theory of mind of other people and a greater theory of mind of other people reaches greater empathy.

So this is a linear trajectory with, horrifyingly, hundreds of millions of people killed during these interventions in the middle, but the direction of travel is incredibly positive. That’s what makes me very, very optimistic on the overall human sweep of things. It makes me completely shift my focus back to, “alright, am I following what I’m interested in at the right moment? Am I making sure that it’s something that’s serving a positive goal?”

When I was on Wall Street, I used to write a lot of stuff that made me feel really great. That was ultimately incredibly nihilistic. You know, like New Atheism, transhumanism, exponential tech. It all sounded so clever, but it was all empty in the middle. Now that I’ve inverted that, and I’m using my voice to amplify things that I think are incredibly meaningful, I’m now on stage at a conference that I wasn’t before, right? These are very small wins for me, but they’re wins. I just think if we can translate that to the individual level, where it’s, “alright, what are you good at? What do you enjoy?” Then, “how can you use that to serve an intrinsically positive sum game?” That’s incredibly difficult to get that balance, but that’s what individuals can do to solve the polycrisis.

Georgia Stewart: So, complexity increases, we want to achieve a positive-sum game. With complexity increasing, does that not also become increasingly harder across the world? This project in my company, and ESG, has made me think about something different than when I first came in. When I first came into the role, I thought the answers to the questions that were being asked were really obvious, because I was thinking about it from my own perspective, whether it’s climate change or whether it’s gender equality or whatever it might be.

In a world that’s globalized, what’s positive for people is genuinely different – I mean, if you’re a miner in the middle of America, and you’re going to live for another 40 years, the outcome for you and the outcome for me that’s positive, they are very different.

I guess you could say the same for people in emerging countries and emerging markets versus in the U.S., but when you’re talking about, say, corporations, or institutions that are now so globalized, how do you decide what’s positive in that instance? In a way that’s fair?

Tom Morgan: There’s an unfortunate answer to that question, which is, once you hit the bottom of Maslow’s hierarchy, right, once your basic needs are met, we can start to worry about all this stuff about consciousness, increasing positive-sum games. There’s an excellent book I recommend to everyone by Vaclav Smil called How the World Really Works and my overriding emotion reading, it was just embarrassing because I just didn’t understand the energy density of the world.

If the countries that are lower income than China achieved 1/10th of China’s growth, that’s a 10x the number of cars globally and a 40x number of air conditioners, are you going to go to somewhere in like monsoonal India and say you can’t have an air conditioner because I want lower emissions? Decarbonization doesn’t even exist as a concept in the way that we think it does, right?

I don’t think we untangle that, absent some major breakthrough in energy innovation, which can then be distributed at scale to things like plastics, cements, ammonia, all these great cornerstones of the world. So that is a kind of this Malthusian thing where, if you want living standards to get better for the world’s poor, that’s incompatible. Also, while I care, I understand that I can’t influence that. So if I occupy my niche perfectly, I might have a hugely cascading positive impact on the world. So, it’s important to understand these things so you don’t make naive statements about how impossible things are, but it might help you stick to your knitting in terms of what you’re supposed to do and stay in your lane.

Evan Harp: I want to add one more question before you both have to go. In thinking about all that: finding your niche, that imbalance where we can’t have air conditioners in the poor countries, there’s something we’re sort of dancing around. That is that there are people who exploit and there are people who are exploited in the world.

How do you get to a situation where the people who are exploited have all their needs met? We want everyone to find these niches and get out of the zero-sum game they are in, but exploited people are limited in their ability to find that niche because other people are determined to continue playing that zero-sum game, one which the exploited are almost always on the losing end of.

Some of us might be slowing down and realizing that this game of, say, dodgeball has gone on long enough, but others are still deeply committed to hurling balls at others and keeping the game going. How do those of us who want people to find their niches, those who are saying “hold on, let’s make sure everybody is housed and fed and consider a different game,” sway the people still trying to bean others in the head?

Georgia Stewart: I think corporate governance of companies could make a massive difference here. Companies have been set up for a different purpose, which is to maximize profits for shareholders over a relatively short timeframe. If you re-engineered corporate governance to incentivize people differently, where their incentives were to meet the needs of society as defined on maybe Maslow’s hierarchy or whatever it might be, then, rather than maximizing profit for shareholders, then I think you go a long way. Because that’s ultimately what the debate is about. Which is, we need to make money so, as it came up on the panel, we need to make money from the social media company so we can’t tell them not to do the thing that society doesn’t actually want them to do.

I don’t know how you change the corporate governance system.

Tom Morgan: We have the abundance, but I can’t see any option where we just voluntarily share it with the Global South. Just I wish I could say I did, but it just absent sort of global awakening, spiritual-like enlightenment thing that happens. I don’t see that happening. I think one thing-

Georgia Stewart: That we share our wealth?

Tom Morgan: Yeah, well, we just redistributed the wealth that we have, 40% of food is wasted in the U.S., right? Just random stuff like that, I think that there’s maybe something that will happen, and as a byproduct of what we’ve just seen, which is that central banks around the world are out of the game and a lot of different situations – that puts governments back in the game. Governments now have access to the monetary and types of fiscal stimulus in a way that they haven’t really. And they have voters that they need to make happy.

What they’re going to do is say, “alright, we need to pay up, we need to pay all domestic industries,” even if that makes them globally unprofitable, because supply chains are a bit screwed up. So we need to reshore systemically important industries like the chip industry in the U.S. That means that people get trained in semiconductors in the poor areas of the U.S. and it means that China goes from the hard pivot they’ve taken away from social media toward making steel, semiconductors, and babies.

I feel like that’s an incremental positive now. Will they be making polluting, dirty, horrible industries? Across the board, probably yes. Will they be rebuilding their defense industries? Yes, probably. Does this retrenchment mean more zero-sum activities between countries? Yes, probably. This is not a unanimously positive thing.

If you can rely on one thing, which is incentives, if politicians have to get elected, then, with the controls of the money supply for the first time, they will have to spend money on their citizens.

Now, I think the global poor is still screwed in that situation. At least the poor within developing countries are going to have to be respected for the first time, I think in 40 years, and you’re already seeing that at the low end of the wage inflation scale.

Evan Harp: Thank you both for this. I hope this is a conversation that continues because it feels like we’re just getting started.

For more coverage of the Exchange conference, visit VettaFi | ETF Trends.

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