Return to insights

The Attention Span. "America’s Master Key?"

It’s fair to say the developed world has some problems right now. It seems like 99% of the public discourse concerns itself with proudly identifying and dissecting those problems. There’s a lot less commentary around robust solutions.

Here’s a quick one-off article on a topic that fascinates me.

I also include a quick podcast I recorded with Worm Capital and a great piece from Gavin Baker on tech investing in unprecedented times.

“America’s Master Key?”

[6 minute read]

Angels Landing, Utah. Source: me.

Modern society has a weird tendency to ignore systems that that have successfully evolved over tens of thousands of years. With capital and attention turning away from America’s coastal megacities, I think we can learn a lot from examining alternative community structures.

Social Psychologist Jonathan Haidt recently wrote a viral article for The Atlantic on why the last 10 years of American history have been “uniquely stupid.” A huge part of it is the steady erosion of trust in American society.

“Social scientists have identified at least three major forces that collectively bind together successful democracies: social capital (extensive social networks with high levels of trust), strong institutions, and shared stories."

One of the most dramatic collapses has been in American trust in institutions. In a remarkable interview (linked below), former CIA analyst Martin Gurri discusses the destructive impact of the information tsunami on the fabric of modern society. It has diminished trust and damaged shared stories. His postulation is that we may have future success with a more decentralized Swiss-style system. “In a fractured age, moving authority to the lowest possible level will be not just sensible but necessary.”

But what if a potential model for rebuilding social trust might already exist within America itself?

Ever since I read Megan McArdle’s 2017 article “How Utah Keeps the American Dream Alive”, I have been absolutely fascinated by the state. Essentially, Utah is a dramatic outlier across almost all American social and economic metrics. It exists as a source of tremendous optimism in showing how U.S. states can simultaneously function remarkably well across numerous diverse dimensions.

Seven really impressive statistics:

  1. Remarkable social mobility. Raj Chetty found that the likelihood of moving from the poorest quintile to the richest quintile is 10.8%in Salt Lake City (highest in the country) compared to 4% in Charlotte (lowest in the country). Salt Lake City has rates of mobility comparable to countries with the highest rates of relative mobility, such as Denmark.
  2. Highest state ranking in America for “social capital.” The Joint Economic Committee reviewed 70 county and state-level indicators, then settled on 32 measures for inclusion in their state-level index, which includes indicators of family unity and interaction, social support, community health, institutional health, collective efficacy, and phil­anthropic health. Utah ranks #1 out of all 50 states.

Here is what it looks like for all states- yellow is top 20% (good), blue is bottom 20%.

Source: U.S. Congress Joint Economic Committee, Social Capital Project.
  1. Nation-leading income equality at all levels. Utah also has a robust middle class.
  2. Staggering success eliminating intergenerational poverty. “The Utah Intergenerational Welfare Reform Commission reports that the number of children experi­encing poverty de­creased by 42% from 2012 to 2017, and adults in poverty decreased by 24% over the same period.”
  3. Robust family structure. Utah leads the nation for marriage and for children with married parents. As McArdle points out: “Economists Isabel Sawhill and Ron Haskins famously estimated that we could reduce poverty by 71% if the poor did just four things: finished high school, worked full time, got married, and had no more than two children — and the number of children was the least important factor in that calculation.”
  4. Low addiction levels. Alcohol abuse, drug abuse, and broken families are all much smaller problems in Utah. For example: Utah had by far the lowest alcohol consumption of any U.S. state in 2020.
  5. Excellent COVID outcomes. A recent National Bureau of Economic Research report ranked Utah top in assessing COVID-related outcomes for health, economics, and education.

The “whats” are remarkable on any metric. The “whys” are likely to be more controversial and subjective, but are no less fascinating to ponder.

Utahans seem to have stronger community support for people who have fallen through the cracks. McArdle cites the fascinating example of Welfare Square- a sprawling charitable infrastructure that’s designed to get the less fortunate back on their feet within six months. Higher measures of social capital are correlated with measures of social mobility.

Religion is obviously a factor, but lots of religious communities don’t have these kinds of outcomes. Most interestingly, Mormon congregation sizes also seem to be clustered around Dunbar’s number of 150 people; the unit that correlates best with social cohesion. Local communities are often gerrymandered to promote socioeconomic diversity. When everyone has a designated role within that community, it further enhances strong ties of social capital. Dunbar’s number is so important because, if everyone knows everyone else, trust is dramatically enhanced.

In fact- if anything stands out from these assessments- Utah is a remarkable mix of robust families, cohesive community structure, and targeted government support. It’s a compelling model for the future of a democratic system in a chaotic age.

When central government control is moving too slowly to adapt to a changing world, moving more power to the edge of the system creates resilience. Places like Switzerland and Utah seem to have largely succeeded in creating robust Dunbar-like local networks operating within a larger whole. Utah now has a significant number of characteristics that make it atypically successful across a broad range of desirable metrics. McArdle’s conclusion is unequivocal.

“Utah’s incredible levels of integration, of community solidarity and support, of trust in government and in each other, enable it to build something unique in America, something a bit like Sweden might be, if it were run by the U.S. Chamber of Commerce. Where the best ideas of conservatives and liberals came together in one delicious package: business friendly, opportunity friendly, but also highly committed to caring for the needy and helping them get back on their feet.”

No system is perfect, and I am certain Utah has myriad flaws and quirks. And I’d love to hear more about them. But there’s enough to admire in their model to consider applying their lessons to business and society alike.

Other Interesting Reading:

  • Read: Prophet of the Revolt interview in The Pull Request with Martin Gurri (48 minute read)
  • Why Read. One of the best things I’ve read in the last 24 months. An insightful sweep across the causes of the current social and political turmoil. (Thanks to Alex Barrow at Macro Ops for the original flag).
    • “The story-tellers – public officials, the media, scientists: the elites – live in an entirely different information universe from the rest of us. They behave as if we were still in the 20th century, and information is still their monopoly, which they dispense as they see fit and which we will accept on authority. They pretend that they alone have escaped Plato’s cave: they know. So their stories strike a mathematical pose, and seek to explain, from on high, how they will apply their expertise to “solve” political, social, or health “problems.”
    • In fact, the public, which swims comfortably in the digital sea, knows far more than elites trapped in obsolete structures. … The public is disenchanted in the elites and their institutions, much in the way science disenchanted the world of fairies and goblins. The natural reaction is cynicism. … The public, I said, is mired in negation.”

Unrelated Reading and listening.

  • Tom Morgan with Eric Markowitz at Worm Capital (54 minute listen).
  • Eric was kind enough to ask me to appear to chat about the business and investing implications of my search for perennial patterns. Eric writes a weekly synthesis e-mail called The Nightcrawler that I find an absolute must-read (there are not many of those). I was so impressed with it that I reached out, and this podcast and friendship was the result.
  • Gavin Baker interview with The “There is no playbook.” (25 minute read).
  • I enjoy Baker’s insights on tech a lot. He makes many good points. Generally lumping everything as tech makes no real sense anymore; especially as some tech spending is as critical as it gets to management teams.
    • “Robert Smith, the CEO and founder of Vista Equity Partners, famously said that software contracts are better than first-lien debt: To pay its software contract, a company will miss the interest payment on their first lien. At first, I had some doubts, but COVID broadly proved that actually to be true. I was wrong and he was right. We know now that software companies have massive pricing power with a much higher conviction than we did before. Also, they are very high ROIC businesses, and their recurring revenue streams will help them in a slowing economy.”

Have a great weekend!

Sign up for updates