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November Newsletter: Putin, Uber and Compensation.

Putin’s Long Term Strategic Advantages

It’s hard to do long term planning in a democracy where governments can be changed out every five or ten years. The Chinese Communist Party has a plan for decades ahead.

In the recent Russia-Ukraine conflict, Putin too has an advantage. He can plan for a longer time horizon than the US or European nations can.

Mainstream media emphasise short-term negotiating tactics with Putin, such as red lines and sanctions issued by Biden or by Ursula von der Leyen. In reality, what matters is long term strategy. Here, Putin has at least two advantages:

  1. Europe is reliant on Russian gas and, in many cases, is actively increasing reliance on Russian gas, e.g. closing down nuclear plants, not building capacity to receive liquid natural gas from other countries, increasing renewables penetration without a solid plan for a base-load or storage.
  2. Europe is somewhat reliant on the US army. I don’t know a lot about armies but it looks like there are about 35,000 US military personel in Germany, compared with a total German army of about 64,000. Further, Baltic countries have in the past requested an increased US military presence.
United States Military Deployments in Europe, from

The issues of energy and defense are not easy matters to solve, and come with plenty of tradeoffs and considerations. As some examples:

  • Energy security and defense both come at an economic cost;
  • Renewable energy is low carbon but intermittent. Adding a lot more becomes expensive, particularly at high grid penetration;
  • Nuclear energy is low carbon but comes with safety, waste disposal and public perception risks;
  • While liquid natural gas could be sourced from other countries, it is a greenhouse gas.
  • Defense spending comes at the risk of prompting escalation in defense spending among all nations;
  • It’s not just about how much a country spends, but how they spend it. Perhaps building cyber and drone capabilities are more important now than the number of troops.

Charting a realistic plan for energy and defense is not politically easy. However, sanctions and red-lines are a poor alternative to long term energy security and defense.

Ideas for Improving Employee Compensation

There’s the conventional theory that technology will automate away jobs.

There’s a second – more nuanced – theory whereby technology first automates away technology jobs (like software programming), and the only decent paying jobs left are manual service ones (I think Sam Altman spoke of this but I can’t find any articles now). This is the state of the world in the science fiction novel Snow Crash, where coders are poorly paid.

A third theory – in the philosophy of David Deutsch – is that there is no limit to knowledge and learning. So, as we automate some jobs, we abstract human contributions to a new level, i.e. we code the computers that code the computers, and so on.

Getting back to reality, I don’t see a shortage of jobs any time soon, but I do see:

  1. Jobs are getting more flexible – at least for office/technology workers – who are able to work at home.
  2. Minimum wages are being set by corporates rather than by governments. i.e. it is Amazon’s minimum wage that sets the effective minimum wage rather than a the federal minimum wage (or often even state minimum), which is now often lower.
  3. Salaries are becoming less geography dependent. I am seeing software coders in lower GDP countries getting a lot higher pay than what was historically the case.
  4. Investing terms are getting more founder friendly and less investor friendly. In other words, leverage is moving away from capital and towards people.

All-in-all, it is becoming more expensive to hire people (a good thing), and therefore more important to get compensation right if you are an employer/founder. One specific aspect of compensation is stock compensation, and I go into some different ideas for improving that here.


When I lived in Boston I only had a car for the last year of the ten years I lived there. From 2016 to 2020 I would use Uber about five or six time per week. In Ireland, we basically don’t have Uber. Yes, you can use an app to call a taxi, and yes you can call a fancy black car, but you won’t get a random unmarked car like the Uber experience in most other countries.

One specific case my Dad makes for Uber in Ireland is to reduce drink driving. Quite simply, allowing Uber would provide a flexible form of transport – particularly for rural Ireland – on top of what taxis currently provide. At the margin, more transport options should reduce the number of people driving themselves home.

More generally, the case for Uber is that it greatly increases the level of rides available compared to cities that just have taxis. This even seems to be the case in cities where Uber enters the market and the number of taxi rides stays more or less constant. In other words, while Uber may (but not in all cases) displace taxi jobs, Uber (and obviously Lyft and others as well) greatly increase the total level of journeys being taken – especially in poorer neighbourhoods. Moreover, COVID has shown that there are significant scenarios where customers pay significantly more for Uber than for taxis, indicating that Uber can objectively provide a better service than taxis in many cases. This is all detailed in this article by Philo.

I don’t own any Uber stock and feel pretty pessimistic about buying it. Reading Philo’s article made me feel a bit better about potential shareholder returns. Still, a business can be very valuable to consumers but not valuable to investors – especially when there is direct competition (e.g. between Uber and Lyft in the US). In that case, substantially all of the benefit may accrue to consumers. I therefore look forward to being a continued customer, but not a shareholder of Uber (although I may be proven wrong).

That’s it for this month, sorry it was a pretty late November edition. To get the next edition by email you can subscribe somewhere up there in the top right corner of the page.

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