Neo

Sometimes, change is only possible at scale.

We take a lot of things for granted in the modern, developed world. We live in enviable comfort.

Consider the thermostat for one. Sensors detect the temperature in a room and compare what they observe to the desired level. If the difference between these two measures is great enough, then the thermostat adjusts the heating and cooling systems to get the measured temperature back to the desired state. If during the day, for example, the sun heats the building and makes things hotter inside, the thermostat will kick in and do its thing. The desired temperature we set in the thermostat is an equilibrium. The thermostat adjusts for small changes to maintain the equilibrium, responding in contradiction to the external impulse. This is homeostasis with negative feedback loops. The equilibrium is stable.

Now, think of something slightly more complex. Imagine that you have a mockup of a series of valleys and mountains represented in three dimensions on a table. Some valleys are deep; some are shallow. Some mountains are tall; others are short. Now, let’s assume that we have a small ball bearing sitting in one of the valleys. How do we move it from one valley to the other without picking it up? We can flick it, but it may not have enough oomph to make it out of the valley, depending on how much energy we expend and how steep the rise it must overcome to make it to the next valley. Small nudges do nothing. It will rise partway up the valley wall, only to fall back to the low point. Large flicks can get it over the hump and into the next valley where it will fall and eventually settle into the bottom of that new one. There is path dependence here. The amount of energy we require to get it to the next valley is a function of where we are now (including where we’ve been in the past) and where we are going. We’re stuck where we are until there is a sufficient push to get us to the next valley. We can think of this movement from one valley to the next as a phase shift or regime change. It’s easy to get stuck in a rut. Not every valley is a good one to be stuck in, either.

Let’s make things slightly more complicated. Let’s say that we want to implement a phase shift. Maybe we can get lucky (or maybe we can learn) about how to do things more efficiently. Perhaps there are new ways of striking our ball. Or maybe our valley is not a smooth one, but one with its own internal ups and downs. Whatever the case, we can imagine that there are points in space or techniques we can apply that give us leverage. Doing so means we can take a relatively small force and obtain the phase shift that we otherwise would expect requires a larger force. For example, in financial markets, we talk about financial leverage: using borrowed money to amplify the returns of our initial capital.

What we’re really talking about is the way in which complex systems (like the kind we see in nature) work.

Evolutionary biology has a theory called “punctuated equilibrium.”

“In evolutionary biology, punctuated equilibrium (also called punctuated equilibria) is a theory that proposes that once a species appears in the fossil record, the population will become stable, showing little evolutionary change for most of its geological history. This state of little or no morphological change is called stasis. When significant evolutionary change occurs, the theory proposes that it is generally restricted to rare and geologically rapid events of branching speciation called cladogenesis. Cladogenesis is the process by which a species splits into two distinct species, rather than one species gradually transforming into another.

“Punctuated equilibrium is commonly contrasted with phyletic gradualism, the idea that evolution generally occurs uniformly by the steady and gradual transformation of whole lineages (anagenesis).^”

Instead of evolving slowly over time, in a punctuated equilibrium new species emerge in response to an event, say an external shock or a change in conditions.

“In 1972, paleontologists Niles Eldredge and Stephen Jay Gould published a landmark paper developing their theory and called it punctuated equilibria.^[1] Their paper built upon Ernst Mayr's model of geographic speciation, I. M. Lerner's theories of developmental and genetic homeostasis,^[4] and their own empirical research.^[5][6] Eldredge and Gould proposed that the degree of gradualism commonly attributed to Charles Darwin is virtually nonexistent in the fossil record, and that stasis dominates the history of most fossil species.”

The motivation here was to reconcile what people observed in fossils with what Darwinian theory suggested.

Instead of gradual change, the fossils are far more likely to show discrete jumps.

When it comes to fixing the bureaucracy in the complex adaptive system known as the United States government, small nudges aren’t going to cut it. People interact with one another. They all have self-interest, acknowledged or not. They’re all updating their sense of the world and adapting their behavior to the moment. Bureaucrats can wait out their political leaders. A twenty-year career outlasts a four-year mandate.

It’s very difficult to change the system, if not impossible.

Look at President Obama. Here’s a tweet with a short video clip in which he announces moves to improve “government efficiency.”

He talks about “rooting out wasteful spending.” Governments need to root out waste “large and small” in a “systematic way” sensitive to the “deficits we’ve inherited” making these efforts more “imperative.” It means cutting “some programs” and “we don’t need to wait for Congress” to act. We “haven’t seen as much action out of Congress as we’d like.” “We’ve identified thousands of government buildings we don’t need.” “I’ve also tasked Vice President Biden to work with secretaries of all our agencies to identify areas of systemic potential improvement.”

Or look at President Clinton and Vice President Gore here:

“DID YOU KNOW? CLINTON AND GORE WERE THE ORIGINAL DOGES They Cut the Federal Workforce by 377,000+ Employees - using Buyouts and Early Retirements... During Bill Clinton’s presidency, the federal workforce was reduced by 377,000+ employees, the biggest cut since WWII. This was part of the National Partnership for Reinventing Government, led by Al Gore, which aimed to streamline operations, cut costs, and improve efficiency. The initiative, originally called the National Performance Review, targeted 426,200 positions, using buyouts, early retirements, and restructuring to shrink bureaucracy. By 2000, the federal workforce was at its smallest size in 40 years, with savings reinvested into public services.”

Small changes do nothing. The homeostasis of an entrenched bureaucracy is the second most powerful force in the universe after compound interest.

It reminds me of the end of the first Matrix movie when Neo, the protagonist, meets the Architect. This is the conclusion of Neo’s journey to find some sort of humane resolution to the dominance of the machines.

“Architect: The Matrix is older than you know. I prefer counting from the emergence of one integral anomaly to the emergence of the next, in which case this is the sixth version.
Neo: There are only two possible explanations. Either no one told me, or no one knows.
Architect: Precisely. As you were undoubtedly gathering, the anomaly is systemic, creating fluctuations in even the most simplistic equations.”

In the movie, the human resistance keeps pushing for change, but they are persistently inadequate. Neo is the sixth iteration of the attempt to flick the ball out of the valley. Previous efforts got the ball up the wall, only for it to slide back and roll around the bottom.

This is what has happened with the previous Neos of our world who tried to reform government. Their efforts could not escape the valley.

Musk and company do not intend to make the same mistake. They understand that they need structural change. They need to remake the government’s DNA.

Musk has taken the red pill.

If he succeeds, not only will he have propelled US government into a new, greener valley, but he will have encouraged others in the private sector to take the red pill, too, when it comes to their own local equilibria.

Musk is punctuating our equilibrium and it is difficult and messy. The people who benefit from the status quo will fight. Others will fail to see what is happening, preferring to live in their blue pill fiction. But, make no mistake, more and more people are taking the red pill and tackling bureaucracy in their own lives and organizations. There is a multiplier effect here. There is an exponential aspect to DOGE’s successes should it manage to reach the threshold.

I have now managed to mix all the metaphors. So, I’ve got that going for me. Which is nice.

This revolution is something we underestimate at our peril as citizens and investors. It has implications for the sustainability of the American experiment, for the persistence of America’s exception economic and scientific success, and for the protection of liberty. It is far more significant than any discrete technological advance. And we all underestimate its implications.