In this episode Saifedean talks about popular misconceptions regarding scientific progress, focusing on aviation as a case study. He describes how the Wright brothers invented the first airplane in 1903 despite claims from scientific authorities of the time that human flight was impossible, and how commercial aircraft capabilities started to decline after the 1970s. Drawing on insights from the work of Terence Kealey, Saifedean describes how many other historical inventions – such as those of Thomas Newcomen and James Watt – were the result of tinkering and practitioner trial and error rather academic study. The podcast ends with a discussion of why the initial treatment of the Wright brothers has parallels with the treatment of bitcoiners today.
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THE BITCOIN STANDARD TOOLKIT/SPONSORS
[00:03:40] Saifedean Ammous: Hello and welcome to another seminar of The Bitcoin Standard Podcast. In today's seminar, I thought I would like to discuss the topic of aviation of all things, because I think it's highly relevant to Bitcoin and the creation of Bitcoin. And I think it also carries a lot of lessons that are relevant for thinking about the impact of hard money and sound money versus easy money.
And it's something that I discuss in my next book, The Fiat Standard, which is now available for pre-order from saifedean.com. So just go to saifedean.com/tfs, and you can pre-order a copy of The Fiat Standard now and you'll get the full draft of the book, which has been completed now. And the final printed copies will be out and the digital copies and the audio book will be out in December.
So you can pre-order it right now from saifedean.com, I had written a paper before becoming full-time Bitcoin. The [00:04:40] last paper that I wrote that was not Bitcoin related was on aviation. In particular, the title of the paper was Slow Down, and it argued that aviation has essentially been slowing down and regressing technically since practically the 1970s.
There was a strong contrast in the paper between how aviation worked when it was first invented in the early 20th century versus how it works now and how it worked after the 1970s, after the move off the gold standard. It wasn't a monetary paper at that time, it was just contrasting them.
But I think looking at it through the lens of monetary economics can be very telling. The first and most interesting thing that you find about aviation if you look [00:05:40] into the history, is just how absolutely improbable and unforeseeable it was. In fact, we take it for granted that you can just get on a machine and cross the Atlantic in a few hours. But up until 1903, the vast majority of people in the world thought this was impossible.
By the vast majority, I don't just refer to people who lived in technologically primitive societies, who couldn't envision this, I'm referring in particular to the most accomplished scientists of the day, as well as the media of the day. And so if you look at 1903, when the Wright brothers first flew, they flew in December of 1903, just a few months earlier, two months specifically, two months earlier in October 1903, the New York times had published a typically snarky debunking of the [00:06:40] possibility that airplanes can fly.
And it was just an article reporting on another person who was trying to make flight work and who failed. And they reported on it with their usual trademark snarky condescending style, which they still maintain until today. And in it basically they marked the notion that you could have humans make machines that can fly.
And they said maybe if all of the world's mathematicians and mechanics dedicate themselves to this problem, perhaps in a million to 10 million years, we might be able to accomplish it. And lo and behold, it was only two months later that the Wright brothers accomplished this.
And not only was it the New York Times that was dismissing this, lord Kelvin, one of the most important scientists in the world, the temperature scale, the scientific temperature scale of Kelvin is named after him. He was a physicist and a polymath, and he did a whole bunch of important things. [00:07:40] And he specifically said in 1896, he said, I have not the smallest molecule of faith in aerial navigation, other than ballooning, or the expectation of good results from any of the trials we heard of. Another important scientist of the day Simon Newcomb in 1903 also said aerial flight is one of the class of problems with which man will never be able to cope.
It was just completely out of the question that human beings could fly. And indeed, they did fly. In fact, of course, at that time the Wright brothers didn't have a video camera to capture their flight with them. Working a camera was almost as complicated as working an airplane at that time.
So they didn't have video recordings of their flight. And so it took a while for the world to [00:08:40] believe that flight had actually taken place. So much so that in 1906, the London Times had dismissed, they said there've been a lot of people who've have been claiming to fly, but obviously none of this is true because 'all attempts at artificial aviation are not only dangerous to human life, but foredoomed to failure from the engineering standpoint'. This was basically the setting for the invention of the airplane.
It was something that was considered completely impossible. And everybody who was an expert on all of the things related to aviation at that time, which were viewed as experts, which were viewed as issues that related to aviation, everybody thought. And this can't be done, and they had very good reason why it can't be done.
You need this and you need that. And we can't have it. Human beings are heavy and you can't just make a machine that will be able [00:09:40] to lift them above the air. And all of these complicated scientists had extremely complicated reasons for why this just couldn't work.
And yet it did.
Now, interestingly enough, and I'm going to come back to the Genesis, but this trend continued even further. One of the Wright brothers himself, a few years after the flight, after the airplane had been invented, and then the world had taken notice in the world was beginning to copy and use airplanes, people were starting to make better airplanes with better range that were flying longer distances.
And then some people started mentioning the possibility of crossing the Atlantic with an airplane. And one of the Wright brothers said, cross-Atlantic flight is not just not going to happen, we're not going to be able to cross the Atlantic on an airplane, airplanes are not made to cross the Atlantic.
And yet [00:10:40] lo and behold, it was only a few years later that the airplane managed to cross the Atlantic and now airplanes crossed the Atlantic hundreds of times, maybe every day. It's astonishing, Orville Wright in 1913, he said, nope, it can't happen. And five years later in 1918, it happened. So the history of aviation was always full of the majority of people who said it can't be done. And then a couple of crazy people who just go ahead and pull it off and actually make it happen. And initially again, there was a lot of skepticism about the possibility that you could make commercial aviation work.
People said, all right we can build these tiny little [00:11:40] planes that'll carry one person long distances, but obviously you can't build an airplane that could be used for carrying passengers or large amounts of luggage. That just can't be done. And guess what? 1926, commercial aviation was a thing. So it only took 23 years from the invention of the airplane until commercial aviation was happening.
And during that time, that too was being dismissed as something that was completely unrealistic. But it did happen. And another example was the sound barrier. As airplanes started getting better and faster, they continued to get faster and faster, but then they started hitting the sound barrier, which is defined as one Mach, I think I forget the exact number and kilometers per second so I'll look it up.
Peter Young: It's [00:12:40] 343 meters per second.
Saifedean Ammous: Yeah, do you know about kilometers per hour?
Peter Young: 1,234 kilometers per hour, 767 miles per hour.
Saifedean Ammous: Okay, yeah. The speed of sound is 767 miles per hour. And that was just completely unfathomable, initially. The first flight, the Wright brothers flew at speed of six miles per hour.
It was basically a glorified kite. And the notion that you could travel on that glorified kite at a speed faster than sound was just absurd. But in 1912, somebody managed to fly at 100 miles per hour. In 1921, somebody did 200 miles per hour. And then in 1931, somebody did 400 miles per hour. Now, suddenly these airplane things started looking more than just glorified kites.
They were going really fast. 400 miles per [00:13:40] hour is really, really fast. They became significantly faster than cars and airplanes. And so commercial aviation started to make sense, but then in the 1930s and 1940s, it was clear that there was just going to be a limit where we won't be able to cross the sound barrier.
The sound barrier is just too high at 767. And for many years, a lot of people had tried, but they would arrive at that speed, and then the pressure of trying to cross the speed barrier would be too high on the aircraft and aircrafts couldn't handle it. And so it was assumed that nope, we're never going to be able to cross the sound barrier.
And yet in 1947, a manned aircraft finally broke the sound barrier. And from then on, the speed just shot up from the 1940s until the 1970s. And then in 1976, July 28th, funnily enough, it is actually the anniversary of it today. It's 55 years to the day that this [00:14:40] flight speed record has stood, that was broken and has stood. It has been 55 years exactly, since an airplane has broken the speed record, nobody's been able to break that SR-71 record which is at that time, 2,193 miles per hour or 3,529 kilometers per hour, which is an astonishing speed. It is a Mach 3.3. So it's 3.3 times the speed of sound, which is enormous.
And also on that very same day, another SR-71, they were just breaking records that day. And one of the SR-71s managed to fly to a record altitude of 85,069 feet, to 25,929 meters, which still stands as the highest altitude record. So it's been 55 years now since the record has been broken for [00:15:40] speed and altitude of aviation.
But since then, everything has gone downhill. And again, I recommend looking at the website, wtfhappenedin1971.com. A lot of things started to go to shit in the 1970s and aviation is one of them. I should add one more thing. Not only was the sound barrier broken, but then we were able to build commercial aviation that was supersonic.
And so the Concorde jet first flew in the 1960s, I think. Yeah, the Concorde flew the first time in [00:16:40] 1969 and 1968 in my notes, but then the first commercial flight, when it was deployed, commercially was in 1976, so the same year in which this flight speed record was broken. That really was the pinnacle of human engineering in my mind. The technologies of the gold standard, era, the airplane and the engine were utilized over the 60 years since the gold standard, when it ended in 1914.
And by 1971 basically, the final move of gold had just caused us to continue to degrade technologically. So 1976, this is engineering so there's a long lead time. So in the 1950s and sixties, they were working on making supersonic flight happen commercially. It happened in 1976, but here's the interesting thing - since then it hasn't happened again.
It's now been 55 years since the Concorde was [00:17:40] introduced and there has not been a faster commercial airliner introduced since then, which is quite astonishing when you think about it. There's really no reason why we shouldn't be getting faster and better at doing all of those things.
And in fact, not only have we not made a better Concorde, but also we've decommissioned the Concorde. There is no Concorde anymore. You can't fly a Concorde. And it's pretty astonishing when you think about it that people could cross the Atlantic faster in the 1970s than they can today. It's something that people don't like to think about because we'd like to think that everything is great and progress is amazing and everything today is better than it was yesterday.
And sure, when we crossed the Atlantic today we have amazing plastic toys in our hands and iPhones that have incredible games on them and incredible screen resolution. And we can broadcast our thoughts [00:18:40] to the entire planet. The telecommunication revolution has been amazing. It still doesn't change the fact that you could cross the Atlantic in three or four hours back in the 1970s.
Now you need seven or eight hours flying in subsonic airplanes, which is also quite interesting. We see this world where we have this story of aviation from 1903 until 1976 in which it's just one miracle after the other, and one expert getting slapped in the face after the other.
And then we see a different story from 1976 until today, where things just continue to get worse every day. The quality continues to decline, things don't get better, and by the objective metrics we see that aviation today can't match up to aviation back then. [00:19:40] So there are three ways in which we can see this happening.
Number one, we see first of all, there's no supersonic flight, as I mentioned, secondly, we can't break the speed record. As I mentioned earlier, where there hasn't been a faster jet than the SR-71. The SR-71 Itself was decommissioned in 1991. It was decommissioned then, and since then the replacement is the F-35, the fastest aircraft that the U. S. army has today, the F 35. Which is not as fast as the SR-71, it's significantly slower.
We've declined in terms of the peak performance. And also, interestingly enough, we've also declined in terms of the speed of commercial aviation, even the subsonic aviation. So even putting aside supersonic aviation, if you look at, and I did this for that paper, I went through the 10 most popular routes in the United States in 2016, [00:20:40] Chicago to New York, Los Angeles to San Francisco, Chicago to Los Angeles, Los Angeles to New York, Atlanta to Chicago, Atlanta to New York, Miami to New York, Chicago to San Francisco, Chicago to Minneapolis, and Atlanta to Orlando.
These are the 10 most popular routes in the U. S. and I looked at estimated flight duration for these flights today, you just check on any search engine and see how long the flights are. And so I wrote the time in minutes. I found airline schedules and airline brochures from the 1960s and 1970s, in particular I looked at 1969, 71 and 72.
These were the years for which I could find that data for these routes. And I looked at the expected time for these flights back then. It was a really interesting exercise, and what I found is [00:21:40] that, and I did it for both legs of the flight, so Chicago to LA and then LA to Chicago, and then you look at the times and you see every single one of those routes is now slower than what it was before. The expected time for each one of these is slower.
In fact today, the average route in 2016, not today, this was 2016 when I did this, is 18.45% slower than what it was in 1969, 71 or 72. So 50 years later, or a little less than 50 years, 47 years later, airplanes are going 18% slower. Commercial airlines are taking longer to get there. And the reasons for that are I think twofold.
First, now there's an emphasis on fuel efficiency in flight. And so they're telling the pilots to try and fly not very fast, but fly at the [00:22:40] most fuel efficient level, and back then they didn't care. They had hard money and so things weren't expensive and, relatively hard money in the sixties, they haven't gone off gold completely, in the 1970s inflation had not started.
And the focus was on performance, and so they were just telling the pilots to go as fast as they can. And so on average it means that today we're 18% slower.
And I think the other aspect of it is that airports today are more crowded. And so getting your airplane from the gate to take off, now it takes longer because airports are much more crowded. So we're not building enough airports to keep up with the demand.
To the point that the customer experience is degrading and the airplanes are not traveling as fast. So in all of these aspects, we see that aviation has just taken on a totally different [00:23:40] face since the 1970s, the military is no longer interested in making faster aircraft. Commercial airlines no longer want to build.
Nobody talks about building a supersonic jet and the Concorde has been decommissioned and nobody wants to discuss why. People very rarely discussed why generally they'll just mention, oh it wasn't economical. There wasn't enough money. And I think that's just completely nonsensical.
If you think about just how much a lot of people would pay to save three hours on a cross-Atlantic trip, I think it's unfathomable that this market option is not available. A lot of people pay a lot of money already on business class flights, and yet they still can't get very quickly.
A lot of people use private jets and that costs a lot of money and they still can't cross the Atlantic very quickly. In fact, the example that I like to give is If you think [00:24:40] of the professional athletes, somebody like Lionel Messi, he plays for the Argentinian national team.
He'll have his games with Argentinian national team, usually in Latin America when he's playing world cup qualifiers or Copa America or whatever. And then he has to go back to Europe, play with Barcelona in Spain within a few days. So you're talking about somebody who's getting paid tens of millions of dollars a year to play football and spending time on an airplane is not good for him.
It can make him exhausted and it compromises his performance. It's, well-known as an issue among football players. Just imagine how much Barcelona FC, his club would be willing to pay for flights that could take him from Buenos Aires to Barcelona in three hours or four hours, rather than eight or nine as it currently stands I presume.
So I'm sure there's a lot of money for it. And the [00:25:40] Concorde was profitable, I wasn't losing money. It was a political problem. This paper was written in 2016 before the Corona hysteria happened, but I think it touches on something that we see, which is just the triumph of the Karens. The triumphs of the negative people who just want to stop you doing things because it gets their knickers in a twist for some stupid reason or the other.
And with supersonic flight, there was a lot of campaigning and a lot of bad publicity around it because people were just uncomfortable with the fact that it was burning so much oil to cross the Atlantic. And so environmentalists were widely opposed to Concorde. And that was to a large extent helping drive the companies that had built it. It was a consortium, a British and French consortium.
And it was commissioned essentially by British Airways and Air France. So those two companies [00:26:40] basically got taken over by managers who were not interested in continuing to work on the Concorde. They didn't want to improve it. They didn't want to build new ones and they just decided to start decommissioning them and the track record, I think also is not an excuse.
Yes, there was one accident with a Concorde, but if you measured the track record, it still has a better track record than other airplanes which have accidents all the time. Not all the time, but the Concorde operated from 1976 until 2000. And I can't remember, sometime in the early two thousands, so that would have been about 25, 30 years or so.
And it had one accident and that was it. During that time, regular airplanes had many more accidents. Now, the interesting thing is if you compare this kind of mentality of the Karens and [00:27:40] also the listen to the experts and listen to the science mentality which is, people are happily flying on airplanes and they're happy paying for the experience.
And then an expert comes in and says, oh no actually you can't slide this because that's bad and it burns fuel and burning fuel is going to boil the oceans and it's going to cause the planet to fall apart or whatever is the latest hysteria. And it's quite amazing because what triggered this entire discussion today is a tweet that I saw yesterday on Twitter, obviously it's a tweet, from Paul Graham who is from Y Combinator startup funding company and Paul Graham is by all means a very intelligent person, who's built a lot more companies and financed a lot more companies than I ever will.
And I will confess and admit that it is kind awkward for me to [00:28:40] be dissing him when he's built probably a lot more than I ever will build in my life, but that's not going to stop me anyway. Just because he builds stuff doesn't mean he's infallible.
But I think his tweet was quite informative of this kind of mentality shift that we see, because what he was saying is,
If you think you don't trust the scientists you're mistaken, you trust scientists in a million different ways every time you step on a plane or for that matter turn on your tap or open a can of beans. The fact that you're unaware of this doesn't mean it's not so.
Which I think are three very interesting examples to use about why to trust scientists and the one that I know very well is, and the reason that I pounced on this is because, in this paper, I looked at the history of aviation.
I'd seen how scientists were out there, essentially saying, trust the experts, listen to the science, stop trying to fly kids. You're only [00:29:40] going to get yourself hurt. And that was what the science said. So in fact if people had listened to Paul Graham in 1903, they would not have been attempting flight.
And the Wright brothers would have been in their bike shed because the Wright brothers were not scientists. They were by no means professional scientists. They were employing the scientific method while building their airplane, that's for sure. But they were high school dropouts who were bicycle mechanics.
They had a bicycle shop. That's what they did. They worked in building bicycles and in their spare time, they took a bunch of the bike material and figured out how to try to build an airplane. And they would go to a field outside their town and they'd try and make the airplanes fly. And they weren't the only ones.
There were a lot of people at that time who were trying to make airplanes fly. And a lot of them were getting killed all the time in [00:30:40] accidents while trying to build this. But it was it was only because they didn't listen to the science. In 1903, Lord Kelvin was saying this is impossible.
Newcomb was saying, this is impossible. The New York Times was debunking the possibility of flight and using sophisticated physics to explain why all of these idiots trying to fly in North Carolina and Ohio and all of that are doomed to failure. It was all the science that disagreed.
And so you had to be a heretic to go and try and make an airplane fly. And thankfully, back in 1903, we had a lot of heretics, and I'm sure if we looked into all kinds of other inventions that were taking place at that time, we would find very similar stories.
We'd find the experts saying, no this can't be done. I tried to do it, it didn't work because of X and therefore it can't be done. Stop wasting your time, you stupid little kids, and just listen to the science, and then the kids go ahead [00:31:40] and build it. And in fact, the examples are numerous. And I think it's very telling that this kind of mentality was not successful in getting people to shut up and stop trying to do crazy things back in 1903, but it has been very successful recently since the 1970s in shutting people down.
And I think the fact that somebody as creative and as intelligent as Paul Graham falls for this scam, I can think of it as a scam, is very telling. This is somebody who's really helped, he has the sort of vision. I don't really know what his track record is exactly like, but I'm sure he's financed companies like Uber and Airbnb, which is quite disruptive, to take a chance on a company like Uber.
I'm not sure if he was actually involved with that, but maybe Facebook as well, but to be an early investor in something like this, to put a lot of money into financing, a company like that. Obviously today it looks like it was a no brainer. [00:32:40] Everybody thinks, oh if I knew about Uber back when he knew about Uber, I would definitely have invested in I'd be rich too today.
Maybe, maybe not. But there was another 1000 companies like Uber that you had to sift through in order to find the Uber and invest in it. And now in hindsight, it's easy to see that Uber is successful and was a good investment, but back then, there was another thousand ideas that could have been successful and they didn't. It's not very easy to pick those things.
So this is clearly somebody who's been very successful at the job of a VC, which is a truly visionary job. You look at the world, you look at the hotel industry for instance, and you think, yep this is how it works, we've had hotels working for so many years, and this is how it's done, but I think we can improve on that. By having people host people in their own home, we can make a lot of efficiency improvements and that would be extremely valuable.
[00:33:40] This would be a multi-billion dollar company. So it takes a lot of courage and a lot of vision to do this. And yet, he still thinks in terms of listen to the science, the scientists are saying things and you should just listen to scientists and you should trust scientists. And of course, it's no coincidence that he happens to be also one of the people who has been extremely hysterical about Corona virus and he's got a famous tweet that he keeps retweeting about.
The nature of exponential growth is such that the best time to panic is when it's too early. Which is pretty ironic that he's still proud of that statement now because it's been 18 months and people are still panicking. And you know, they panicked early and they're panicking late and they're still panicking just because the science says you should panic.
And I think there comes a point where you need to be a little bit more critical in your thinking and employ a little bit of Wright brother thinking and just think, yeah you know what, panicking hasn't [00:34:40] helped anybody. All of the stupid things of the panickers have asked people to do have been counterproductive likely.
What does actually help is not panicking, not losing your mind, maintaining your health eating well, getting sunshine, getting exercise, staying strong, staying healthy. That's going to help you much more than anything else you could do. But of course that's not very popular in Silicon Valley because a lot of people aren't going to have a lot of ideas about how to milk the Corona hysteria for profits.
And a lot of people have the, even though they're very creative people, they still have the listen to the science bug. They've still caught that. And that I think is very interesting. I think you cannot separate that from the distinction between hard money and easy money. And I discussed this in The Bitcoin Standard briefly where I talk about just the amount of innovation that happened in the 19th century.
You think [00:35:40] about the things that the gold standard gave us. It's one of the most ridiculous things that Keynesians say is, if we didn't have monetary expansion, if we didn't have inflation, we wouldn't be able to finance so much innovation, look at all the innovation that we have.
And in fact, look at all the innovation that we have, look at all the most important life changing technologies that we have today, they were all invented under the gold standard. Almost all of them. The telegraph and the phone and the computer as well. The predecessor to the computer was invented back in the 19th century, the airplane, the car, the elevator, the subway and an enormous number of medical inventions and all kinds of other inventions were invented in that golden period when the whole world was on a gold standard in the late 19th century, basically.
The mid 19th century, late 19th century, also early 19th century as well. But [00:36:40] it was invented by countries that were on a gold standard. So how did all of those people manage to make all of these inventions without an inflationary money printer to give them money?
Well, the answer is because there was no inflationary money printer to give them money, that meant two things. That meant that there was no inflation to finance people like Kelvin and Newcomb to go around and shut down aviation and ban it and make it illegal because it is dangerous because they didn't have a lot of money because there was no magic money printer that could finance all of the Karens and the negative Nancies who would want to shut everything down on the one hand.
And then on the other hand, the fact that you had a hard money means that people like the Wright brothers, two bike mechanics could in their spare time, on their weekend, with their savings, invent airplanes. [00:37:40] It's mind blowing. When was the last time anybody used, invented something like the airplane in their spare time with their own savings.
If you think about it, they weren't financed by VCs, they weren't financed by inflation. They didn't get a massive loan from the bank in order to invest in the airplane. They built the airplane first, they flew first, they made it work and then they looked into commercializing it and making money off of it.
And they did, but it's very different from how things happen right now, because right now, think about the possibility of inventing something. It's going to require you to take some serious time and it's going to require some resources. And the vast majority of people don't have any resources.
They don't have savings that they can just put into things. Most people live hand to mouth, basically, a lot of very rich people live hand to mouth. There really are people who are in seven digit income and they still live hand to mouth. And you know, they spend everything they [00:38:40] earn and they barely have any savings.
That kind of person, today, because of the fact that money is broken because of the fact that money can't hold its value, they can't have savings, they don't keep savings, they have no incentive to save. They spend all of their money and therefore they have no spare time. They can't take a week off from work because if they take a week off from work, they don't eat, no matter how much they get paid.
So they can't have the schedule or the savings, or even the mental clarity to think about, maybe I could be the one who could invent flight. They don't have the kind of luxury and freedom to just ignore what the New York Times says about flight, because who cares about what the New York Times says, are a bunch of people sitting in an office in New York writing.
They don't know about what it would take to fly something in a field in North Carolina. But that kind of mentality is what was existing in the gold [00:39:40] standard era. This is how the telephone and the telegram and all kinds of amazing inventions were invented. It was people who were thinking in their own backyard or in their own garage playing with their things that they could buy from their savings.
And the vast majority of those people failed at building things that they wanted to build. The vast majority of people who tried to build the airplane failed. But some of them succeeded and the ones who succeeded changed the world. So that kind of optionality of people being able to have savings and being able to use those savings in order to invest in something that they like, and then come up with an incredible new invention.
I think this is much less likely to be seen today because you see most people are just stuck in office jobs having to pay their bills because nobody has savings. On the other side, the flip side of the coin of you not having savings is that wealth is [00:40:40] allocated by fiat, by the government that owns the printing press.
And it gets allocated to the Lord Kelvins and the Simon Newcombs who go around and tell you you can't do this, you can't do that. That money has been allocated so effectively over the last 50 years that scientists or professional science, university science has essentially brainwashed generations of people into thinking that the reason that we have all these incredible inventions is because of science.
The reason that the airplane flies is because we have physicists who are able to make all of these fancy, incredible equations and theories about physics that allow the airplane to fly. Wrong. That's not how that works. Physics was completely settled. The science was settled in physics that airplanes can't fly.
They had their equations, they had their models and theories about it. And it was clear among all the [00:41:40] physicists that lived in 1903, maybe not all, but I think a majority of them would have agreed with Lord Kelvin that this is just not going to happen. And it wasn't the physicist who built the airplane.
It was the Wright brothers. The Wright brothers were bike mechanics. They were the ones who didn't listen to the experts. They did not trust the science. And that's why we have airplanes today. And in fact, I really very strongly recommend a book by Terence Kealey that is called The Economic Laws of Scientific Research.
And it's a really important book. And I quote this in The Bitcoin Standard. I mention it The Fiat Standard. It's a really powerful book. Kealey is one of the very few British professors who is not government financed. He works at Buckingham University, which is one of the last remaining private universities in the UK.
And not being a fiat [00:42:40] professor means that he has very different perspective on things than most fiat professors. And this book is absolutely mind-blowing. He discusses the industrial revolution and how the industrial revolution came about. And of course, the thing that you hear about from your university professors, from your fiat university professors who are financed by their government and who speak in the official name of science and who can issue declarations on things.
They will have you believe that the reason that we have the industrial revolution is because of the advancement in chemistry and physics. In fact, the reason that we have the industrial revolution is because of barely literate iron mongers and technicians and workers who got their hand dirty and were just trying to solve problems in the real world, they were trying to make things better for themselves.
So I think, perhaps the most important invention in the last [00:43:40] 1000 years might arguably be the steam engine. You could argue a few others. There are a bunch of good ones, but I think the steam engine really is pivotal in my mind, because it was the one invention where we managed to start turning fossil fuel energy into cheap highly abundant dirt under the Earth.
We started to turn this into kinetic energy. We started getting it to do work for us. And eventually, obviously the steam engines continued to improve over time. And then we made the internal combustion engine and then we made jet engines and now engines are extremely efficient and extremely powerful.
And there are billions and billions of glorious, powerful engines all over the world, currently allowing you to experience all the amazing things that you take for granted in your life. I think the steam engine is the most important [00:44:40] invention because it was the turning point. It was the moment at which we took fossil fuel energy and turned it into kinetic energy.
And then once we did that, then the flood gates were open. And then the flood gates were open both conceptually because, oh maybe we can burn things in a different way and produce kinetic energy in a different way, but also the flood gates were opened from an engineering sense, because now with the steam engine you can build all kinds of other stuff.
And because you could build all kinds of other stuff, you could build all kinds of amazing new inventions. So you could argue the computer is more important than the steam engine. Perhaps, perhaps not, but the computer would not be possible without the steam engine. If we hadn't invented the steam engine first, we would not have been able to develop the computer.
So all the machines that we have, ultimately come down to the steam engine. Arguably, it might be the most important thing that we've invented since [00:45:40] fire. Maybe language. It's tough to say with these things. But yeah, the steam engine is a big deal. So let's take a look at the steam engine and in the economic laws of scientific research, Kealey does a great job looking at the steam engine and explaining its history.
So the first thing you realize is what is called the linear model of scientific progress, which is taught at universities and is essentially government propaganda, it argues that you have the smartest people in any society gather in a university, and then they talk to each other and come up with theories and they develop scientific knowledge.
And then they use that knowledge in order to bring about improvements in practical products. And then they communicate these to people who work in business and building [00:46:40] products, and then they start developing these new technologies. And it's as if the scientific progress comes from the scientist and then finds its way to the engine shop and then spreads to the consumer.
But the reality of how those things have always developed is very different. The reality is, the person developing and the person making the breakthroughs is somebody who's out there dealing with these practical machines day in and day out and having problems with its operation and thinking of ways to solve these problems.
This is how it happens. It's problem solving on the ground. It's getting your hands dirty with engines. And the first commercial steam engine, first of all, the steam engine was essentially a development of a pump. Pumps had existed and people were using pumps and then they started adding more and more features to it.
And then at some point, and it's not very clear [00:47:40] where we draw the line between pump and engine, but at some point we have something that we can call a steam engine. And so in that case, we see that the first commercial steam engine, the first steam engine that got bought by anybody with the purpose of using the steam engine for productive work, was produced by a guy called Newcomen. And Newcomen was a barely literate iron monger, Simon Newcomen.
This was in the 18th century. And he couldn't really read. He could barely read and write, and he'd never met a scientist in his life. He had never met a scientist. He'd never been to a university. You're talking about essentially a low class, low pay worker who was out there dealing with pumps all day and he was an iron monger.
So he knew how to turn iron into different shapes and make different things out of it. You can get into the details of how he did it, but at some point he figured out [00:48:40] that this could be a very useful thing. He did it, he built it and it was so useful that a lot of people wanted it. And he built 300 models of this thing.
There were 300 Newcomen engines that were deployed in different places across England when he did it. Nothing happening in the universities of England had anything to do with this. This was just basic ugly technology on the ground. And the scientists had nothing to do with it. James Watt, who is usually credited with being the inventor of the modern steam engine, because he really built the thing that is closest to what we have.
Although I think arguably his role is likely a little overstated and his role is due to the fact that he was the first one to patent, I think, the engine and in the process, he ended up slowing development in the engine by being a patent troll and preventing people from building their own versions.
But in any case [00:49:40] James Watt was not a scientist. And he's had the watt unit of power named after him. So when you hear the word kilowatthour, the watt there is from James Watt, the inventor of the steam engine. And he was a technician at the university of, I think, Glasgow or Edinburgh. He was a technician.
He was not a scientist. And after he invented the steam engine, he was asked whether he had benefited from or whether he was inspired by the equations of Richard Boyle or some other scientists or the other. And he said nope, that had nothing to do with it, I was just in the workshop and I figured out how to build things.
And I think this is really very telling. You look all around through the history of science and technology. And there's a good book on this that is called Serendipity by Robert Merton. People might know Robert Merton from the long-term capital management fund [00:50:40] which blew up. And he has the Nobel prize in economics because of his work on the Black-Scholes model, which blew up and caused a huge disaster.
But that's his father. And his father was a sociologist and he wrote this book called Serendipity, which was actually a very interesting book. And it shows just how much of scientific discoveries and technological innovations happen like that. It was just people playing around with things, and then they discover that, oh wait, look this thing can do that, that sounds like it might be useful.
Or people trying to find a solution for a problem. And then chancing across another technique for doing it, which ends up being useful for something else. So a lot of it is serendipity and it really defies the thing that we usually hear from universities about this just being the linear top-down model, where government finances scientists, scientists produce important research, [00:51:40] the important research is then applied by engineers into their workshops in order to build products, and then the consumer benefits from it.
It's entirely the other way around. The engineers are working at serving the consumer, and are constantly receiving feedback from users in terms of this is good, this is bad, I don't like this, I like this, could you make this faster? Could you make this bigger? Could you make this more powerful?
And they're constantly trying to improve. And from these attempts, the vast majority obviously fail, but the few ones that succeed get copied by everyone and change the world. That's how things work under hard money. Kealey's book is incredible because it explains just how much this has been the case for scientific innovation.
How little role has been played in the industrial revolution by [00:52:40] scientific theories and how little of a role was played by government financing. In fact, Britain, which witnessed the industrial revolution, had exactly zero public funding for science. Public funding for science did not exist before 1914 in Britain.
It was exactly in 1914 with the start of World War I, and when they went off the gold standard that they started saying, oh yeah we need to have the government finance education. We need to have the government finance science. Before that they developed the entire industrial revolution without the government having to finance any scientists.
And since then, what has Britain invented? What has Britain really done in the past 100 years since going off the gold standard? And how does it compare to what Britain did 200 years before that, on the gold standard? So we have the steam engine and an infinite number of enormously important and useful products back then in the past [00:53:40] 200 years.
And what do we have in the last 100 years? The Concorde? Yeah, I think that was probably it, but still the Concorde was just an improvement on aviation technology that was invented before 1914. It was invented on the gold standard. So in this regard, it's quite telling that you see the majority of, and the most important innovations come in the gold standard and you see them come through the market process.
And now that can only make me wonder. Looking at the world that we have today, just how much more innovations and how much more important innovations could we have had in the last 100 years, if we hadn't taken the globally idiotic move of going off the gold standard. If the world was still on a gold standard until today, if everybody could still save, if everybody could be reasonably sure that they can save money and that would appreciate it around 1% or 2% or [00:54:40] 3% per year, and we had governments that couldn't finance all of these negative Nancy's and Karen's like Lord Kelvin, and all of these people who are just out there to take government paychecks and to tell you that what you're trying to do is unworkable.
If we didn't have that, it's truly amazing to think about just what the possibilities would be for the world today. Where we would be and how different life would be. I think it might probably not be an exaggeration to say that the things that we have today might have been developed by the 1960s and seventies.
We might've had smartphones by the 60s. I think it's not an entirely unreasonable thing to do. When you think about just how much capital has been destroyed and how much innovation has been forestalled by fiat. Taking money away from savers, making them more financially vulnerable and then necessitating that they continue to [00:55:40] work and that they not have the time to tinker in their backyard like the Wright brothers did.
When you think about all the money that goes to finance scientists, think about all the taxes. Here's a way of putting it, Simon Newcomen and James Watt in a fiat world, they would have been paying much higher taxes and they'd be paying the inflation tax that goes to finance the university professors that were sitting there and pontificating about all of these things and how they can't be done.
The Wright brothers in 1903 would have not had savings and those savings would have been going to pay for the scientists that were calling them unrealistic. It's obviously hard to argue what the counterfactual is. Because we don't know, we will never be able to relive the 20th century with hard money, [00:56:40] but it's hard to see all of these patterns and argue that they would have been insignificant. To argue that if a century of taking away the savings of the Wright brothers and financing Lord Kelvins has not reduced our ability to innovate.
It's very hard to make that argument, I think. And interestingly, I think also another important point here worth mentioning is that the improvements of the industrial revolution, I don't think they're just important for the obvious, industrial and quality of life reasons that we see, I think they were massively important for medical and health improvements.
There's pretty good evidence, and I'll post an article that I've read about this at some point, that suggests sanitation and electricity, and running hot water, [00:57:40] and just not living next to our feces has had a far bigger impact on human health than any of the medical interventions that are supposedly hailed as miracles.
In particular, draining swamps and draining trash. Draining swamps away from drinking water, simply just separating drinking water from wastewater. Wastewater management is probably responsible for more of the health improvements of the 20th century than anything else.
And this is something that was beginning to be done in the modern highly productive way toward the late 19th century, thanks to fossil fuels and thanks to hydroelectric energy, I mean hydrocarbon energy particular, because it allowed us to build all these incredible engines that could move water around and that could treat water and that could prevent our waste from entering [00:58:40] into our drinking water and this massively boosted life expectancy and health outcomes in many different ways.
I think it is arguably far more important than any of the medical interventions that are usually credited for this. It's hugely underrated how important modern industrial technology and civilization has been for our lives. And of course it's underrated by the scientist. It's underrated by the people who are telling you to trust them.
I think it's quite telling. And of course the obvious point where I'm going with all of this is to bring it back to Bitcoin. It's been an hour of ranting in order to get to the point on Bitcoin. The reason I think Bitcoin fixes this is, well I think Bitcoin fixes is because Satoshi was very similar to the Wright brothers.
I think the invention of Bitcoin is just an excellent example of something that we haven't seen [00:59:40] for a long time. Perhaps we haven't seen it as starkly demonstrated since the Wright brothers. Which is something, all the experts agree, cannot work. And just like with the Wright brothers, it was maybe four or five years after the actually flew that the world came to accept the fact that they did fly indeed.
Similarly with Bitcoin, it's now been 12 years and people still deny Bitcoin. People still think no, it can't work, it's going to go to zero, it's unworkable, it's going to be shut down. Government is going to turn it off one day with magic internets, which they have.
It's really very similar. If you look at the deranged nocoiners and the hate that Bitcoiners get, and the hate that Bitcoin as a concept gets, it's very similar to aviation. We had all these very important scientists back then who had staked their names and reputation on [01:00:40] airplanes not working.
And we have all these self-important economists today who have staked their names and reputations on Bitcoin not working. And guess what? They're all getting wrecked basically by the airplane working and Bitcoin working. I think it's the best counter to Paul Graham which is, no you shouldn't trust the scientist because that's just a complete oxymoron.
Science is a process of experimentation. It's not reliance on authority. And it's very telling that when he wants to give us examples of why we should trust the science, he can't even think of an actual example of somebody listening to a scientist and benefiting. I'm sure there have been scientists that have done good things to the world, and there have been people who have listened to the scientists and benefited from it.
You could find examples, I'm sure you can. And yet when he wants to come up with an example, the example that he comes up with is [01:01:40] something that is the exact opposite of listening to the science. The airplane was only possible because people didn't listen to the science and the other examples he brings when you turn on a tap, plumbing again, that was not as though that was not something discovered in some university lab.
It's something we've had for thousands of years and engineers have been improving upon it incrementally for thousands of years. And then the tin can. Opening a can. And that's maybe the most absurd because there are no laboratories at universities that are out there trying to discover how to make tin cans. Tin cans and can openers were discovered by merchants and entrepreneurs and iron mongers and people who work with the tin and so on.
And they figured out, hey we could preserve food by locking it in this thing. And then others tried it and they didn't die, and the food still worked, and so then it became popular. So all of these examples come from people not listening to the [01:02:40] science, not trusting the experts and going out there and actually building something that works.
That's how you got all of those things to happen. And that's how I think Bitcoin really worked and I think Bitcoin fixes this because it's bringing back that idea. And I think the internet is really the place where we see it because it's very hard to be able to be a Wright brother with physical stuff, because physical stuff is very expensive because we are all being robbed by inflation all the time.
But it's easy to be a Wright brother with internet stuff, with digital stuff, because you just need a laptop and then you can build. And then the government is going to be far slower about finding out what you're doing. So we see Uber is still operating and it's been so many years. I don't know how many years they've been around, but they're still operating even though a lot of people would've thought that government would shut all this down.
Bitcoin is still working. In the world of technology in the world of digital [01:03:40] stuff It's very difficult to stop code. So this is one way, and then the second way in which Bitcoin fixes this, of course, is that Bitcoin essentially and beautifully defunds the people who live off of government money, defunds the people who are the experts. It makes it very hard to maintain a plutocracy or an oligopoly of scientists who get to tell us what the truth is.
The only reason we have this right now, I think is fiat. And it's fiat financing of universities that has corrupted the scientific process, which I discuss extensively in The Fiat Standard. And by defunding that I think Bitcoin is going to bring back a golden age of innovation. By shutting up the experts and definancing them and making them have to do productive things with their life and provide valuable services because they won't be able to rely on a money printer.
On the one [01:04:40] hand it's defunding the experts. And on the other hand, it's putting savings in the hands of the Wright brothers of today. It's letting all people all over the world manage to keep their savings, allowing them financial security and allowing them to be able to invest their time in doing creative things.
If you look at how much more creative energy you see from Bitcoiners in terms of innovation, I think it's not a coincidence. I see it in myself personally, and I think it's something that a lot of people talk about in the Bitcoin space, because once you've moved from the world in which you have your money being devalued and the money is constantly losing value, you're constantly discounting the future a lot.
And so your actions are dedicated and focused on day-to-day survival. And there's very little regard for the future. As soon as you switch to a Bitcoin standard, as soon as you start [01:05:40] holding Bitcoin, you start seeing you're able to provide for your future reliably well. You know that the savings that you save today will be around tomorrow.
And they'll likely be at a higher price than what they are today. And with that in mind, you start discounting the future more and you start thinking about the future more. Sorry, you start discounting the future less, and you think about the future more and you provide for it more and you work for it.
Then you start working on things that are not fleeting and day-to-day, and you start working on things that will last. And this was my inspiration for writing The Bitcoin Standard. Before that I just was not, before I was a Bitcoiner I probably wouldn't have been able to complete the book because I didn't have the time preference to sit down and actually write a book.
So it's a wonderful thing that Bitcoin fixes this. And it's an amazing thing that, I think on a Bitcoin standard people are going to just laugh at the idea that one day people seriously [01:06:40] said, listen to the science and trust the science of trust the experts. It's a ridiculous idea.
Peter Young: You just taking a breath Saif?
Saifedean Ammous: I think I'm done.
Student 1: I want to ask you a question.
I don't mean to trigger you and fire you off into a rant, but I fear it might, I hope it does, but with regards to, what's going on right now, with our incumbent billionaires and this kind of potty space race, that's going on with the likes of Bezos and Branson of recent times.
And of course our old friend Musk, how have you been thinking about that? And tying that all back in with the Wright brothers who obviously come from building a bicycle shop. Arguably, [01:07:40] Bezos also built Amazon with his own bare hands, in my opinion. So he can spend his money on whatever he wants, but there's been a hell of a lot of Karening going on around this topic.
And their goal is, silly as it might sound, too to make space tourism a thing. Whereas, let's concentrate really on getting supersonic flight back for the mass populous, because Concorde was of course (???) I'd just like to see where your mind been spinning with that one.
Saifedean Ammous: Yeah. I think I agree with you. First of all, let me just say no, I don't care about how they spend their own money. I'm very happy for them to launch themselves into space or under the sea, or do whatever they want with their own money. However, it's not their own money. These things are government supported entities.
They get a lot of [01:08:40] money from NASA and from all kinds of government agencies, which is essentially the only business model that Elon Musk has. Come up with some fancy story, this case, the same people who think, oh no the concentration of carbon dioxide on earth is rising from 0.028% to 0.041%. and that's going to make Earth uninhabitable.
And that's why we need electric cars in order to stop emissions, even though electric cars probably make more emissions, these same people will also tell you, yep, we need to move to Mars where CO2 concentration in the atmosphere is 95%.
So the Earth on which we've lived for, God knows how many thousands of millions or billions of years is going to be made inhabitable by 0.04% CO2, but Mars, which we've never been to and has enormously high temperatures is going to be made [01:09:40] habitable with a CO2 concentration of 95%. So clearly, this isn't very coherent and consistent, and it's just meant to attract government subsidies.
So SpaceX lives off subsidies and Tesla lives off subsidies and carbon trading scams. I don't begrudge them doing whatever they want with their own money, and I wouldn't mind people getting into space tourism. I don't think it would interest me to be perfectly honest.
I mean, if even if money was not an issue, I'm not sure I'd be interested in taking a rocket to space. I would probably consider it only at a point where it becomes highly safe and secure and has been tried commercially and it's kind of a rule of thumb I have with aviation as well.
When I wrote this paper as well, I was looking at the safety record of aviation and I do mention that safety of aviation has in fact gotten better over time, but the [01:10:40] way that it has gotten better, what I find interesting is it's gotten better with commercial aviation, with airliners. But what it has a terrible safety record is private jets and helicopters. That is actually quite risky.
And I think the reason for that in my opinion is that when you're flying commercial airplane, you're flying between say two airports. You're taking one airplane between two airports, the pilot and the co-pilot will have almost certainly been on this route before and will have done this same landing on the same takeoff before. They have communicated with the same communications tower.
Both of the airports would have handled this airplane before. So everything has been done before. Everything has a checklist and you have a massive operation where hundreds of people in both airports [01:11:40] and on the airplane, everyone from the steward to the pilots, to the gasoline people fitting the gas, everybody has been doing this job as a routine.
Where they have checklists and they do it for a living and they turn up and wake up every morning and do this thing professionally, this is what I like to hand my business to. This is what I like in all things, I think getting in a taxi is probably safer than driving because the taxi driver is somebody who's been driving for most of their life, much more than you have and has better experience with it.
I think the same is true in terms of commercial airplanes. So for me, if I was around when airplanes were invented, I'd like to think that I wouldn't have been a negative Kelvin and telling people that it wouldn't be done. But I think I would have been a bit negative about getting onto an airplane.
I don't think I would've gotten onto an airplane until the 1930s. Even if I'd known [01:12:40] about them from 1903, I think I would've had to see commercial aviation take off, and I'd have to see an illustrated high track record and who knows when I would've done it. So in this case, it doesn't really interest me so much until perhaps it becomes really widely commercially deployed that it's a matter of routine. The fact that it is taxpayer subsidized, or fiat subsidized I should say, the fact that it is fiat subsidized leads me to think that it's probably a stupid waste.
Not probably, definitely. If it was a good idea, if there was some commercial value from it, if you're the richest man in the world and you need 11 minutes and you pay all this money and you need all these government subsidies in order to get into the space for 11 minutes, doesn't strike me as a viable business model.
I know I might be sounding here like the people who would have dismissed the airplane saying this can only fly at six kilometers per hour, [01:13:40] six miles an hour or whatever, so there's no point. The cars can go faster. While the airplanes will get faster, perhaps, but until they do, I'm not really concerned a lot.
And I've had very strong reasons to suspect that they wont because it's government subsidized. If this was not government subsidized, then I would expect that it would improve, but I think it's a boondoggle for people to continue to come up with, whenever anything is government subsidized, it does not improve over time.
It just finds more excuses for getting more funding. I might be wrong, but I think it's quite telling that these people are so detached from reality in the sense that yeah, wouldn't you like your private jet to be a supersonic, wouldn't that be a better use of your time so that you could fly from LA to New York in under an hour or two hours.
Wouldn't that be nice. [01:14:40] How much time do those people spend on their private jets? It's politically unpopular to talk about supersonic flight, and so nobody wants to go there. Somehow they managed to make space more politically palatable, I guess a lot of space.
Another point is that, it's been 50 years since we got to space, well 60, 70, years since we got to space and it's still pretty expensive. It's still at the level where the world's richest man can do it for 11 minutes. Maybe it's just not as technically feasible as many space fans would like to think.
And there isn't a large element of the I fucking love science cult to space fandom in general, which I find this distasteful. Which is people just LARPing science at home, watching TV and [01:15:40] hearing what scientists say on TV, and then thinking that they're on team science.
It's a more pathetic version of being a sports fan. And I say, this is a sports fan myself. But like, at least with a sports fan, you do enjoy the experience of watching the game with people and talking about it with people. And there is an element of that. You kind of do that with space, but I think in space it's kind of like you think that you are one of the players on the team just because you're watching.
But yeah, I'm definitely not on the viewpoint that this is a waste of resources and they should be paying their taxes instead of going to space. I don't care what they do with their money. In fact I'd like a world of a lot of very rich people trying all kinds of outlandish and crazy things because that would bring us amazing output from it.
But I think I'd much rather not have a world, in a fiat world, you have Bezos and Musk [01:16:40] and a few crazy billionaires being able to afford this while everybody else is a wage slave in a nine to five job. I think in a Bitcoin or gold world Bezos and Musk would be relatively far poorer to the average wage slave, who wouldn't be a wage slave, who would most likely be an entrepreneur and an owner of capital who had spare time.
And then instead of a couple of hundred billionaires trying crazy things, we'd have a couple of hundred million people trying crazy things with fewer resources, but a lot more variation. I think that would provide us with a lot more richer outputs.
Student 1: And it's just one thing I want to pick up on there what you said.
Cause I don't think anyone's really done your level of risk analysis of flying in commercial airplane to a private jet or anything else that you seem to look into. [01:17:40] You're clearly talking about yourself there, you wouldn't expect someone like you to be an early adopter of anything, as you were explaining.
And yet here you are. You wrote the Bible on Bitcoin. You are completely convinced on Bitcoin. You've clearly gone down the risk analysis hole of Bitcoin. I think anybody listening at this point should.
Saifedean Ammous: I guess the way to square that is the fact that I was actually pretty late to Bitcoin.
I heard about Bitcoin pretty early. I don't even remember when I first heard about Bitcoin. It was either 2010 or 2011. And I had the smartass, not early adopter viewpoint for a very long time before I took into it. You know, this might have saved my life in terms of getting [01:18:40] into crazy experimental technology in certain ways, but it was definitely also a very expensive mistake by getting into Bitcoin late.
I'm earlier than most people for sure, but I think the time from hearing about Bitcoin to actually buying your first Bitcoin for me is exceptionally high which is a painful reminder of my big headedness and how expensive it can be.
Student 1: Love it mate, excellent.
Saifedean Ammous: All right, I think unfortunately we're running out of time, I need to get going. So I can't really take many more questions for now or any more questions I gotta run, but thank you very much guys for joining and I will see you next Monday where we will have Paul Saladino I believe in the seminar, right? Yes, so we'll be discussing the carnivore diets with Paul. All right, see [01:19:40] you guys.