AUGUST 2018

Seismic Shifts in our Social Culture – Part II: Synopsis from the Aspen Ideas Festival

Category: Portfolio Management

By Doug Cohen, Managing Director, Portfolio Management

Please see Part I of my Social Culture synopsis from the Aspen Ideas Festival.

Key takeaways on the politically-oriented sessions can be read here and here, and observations from sessions on climate change and disruptive technologies can be read here.

 

On the Road with the Rise of the Rest

Steve Case — Co-Founder of Revolution; Chairman of the Case Foundation; Co-Founder of AOL

1) Mr. Case is heavily focused on extending opportunities to Americans that have been left behind. Virtually all net new job creation in recent years has come from small enterprises and approximately 75% of venture capital in the US comes from three states: California (50% of the total), New York, and Massachusetts. Approximately 90% of new venture money goes to men and only 1% to African Americans. There has been a notable “brain drain” in Middle America and the Rise of the Rest Fund is designed to level the playing field so success isn’t predicated on “whom you know.” The US has successfully led the world through major transitions from the agricultural economy to the industrial economy to the technology economy. However, the rise of artificial intelligence and robotics may pose the most formidable test yet.

2) To date, Mr. Case and his team have visited 38 cities in 26 states by bus. On each tour, his team will visit five cites in five days and invest at least $500,000 in local start-ups. They will spend one day meeting with local politicians, business and community leaders, professors, etc., and organize meetings with entrepreneurs. There is a “Shark Tank-like” competition to identify potential new ventures. They get venture capitalists to fly-in from California to participate. In the same way that people told him AOL could never succeed, he is highly confident that the challenges that face cities ranging from Detroit to Birmingham to Indianapolis can be overcome. The Rise of the Rest fund has $150 million to fund start-ups not located on the coasts of the US, with financial backing from an all-star line-up including Ray Dalio, John Doerr, the Koch family, Michel Milken, David Rubenstein, JD Vance (who was scheduled to attend with Case but had flight problems) and Meg Whitman. A total of 75 individual investments have been made to date. For every new job created by a start-up, five to six additional jobs are created to support the start-up.

3) Although the Rise of the Rest effort is nonpartisan, Mr. Case senses the frustration that he believes propelled President Trump to victory—in that sense he was not shocked by the election outcome. He would love to see a modern-day Marshall Plan aimed at job creation, worker retraining, and enhanced Opportunity Zones. That said, he doesn’t see a great likelihood of that coming anytime soon from the federal level, so he would rather focus on the local level.

--A key question that was not addressed: From a purely financial perspective, is there any evidence that the Rise of the Rest Fund is likely to outperform more conventional funds?

 

The Inequality Puzzle: Shrinking the Gap by 2020

Jackie Bezos – Co-Founder and President, Bezos Family Foundation

Celinda Lake – President of Lake Research Partners and a pollster and political strategist for progressives

Marjorie Sims – Managing Director, Ascend, The Aspen Institute

1) Recent survey data indicate that Americans are more interested in stability and security than opportunity. A sustainable wage is a core way to help promote security. Individual states are likely to take the lead on social reform as the federal government pulls back. Governors want input on education-related issues. Women voters, in particular, are very concerned about the diminishing safety net.

2) Universal income may be an idea whose time has come. Public support is still not as strong as it could be—it often depends on how the question is asked. However, there is broad support for making sure that parents succeed so that their children have a better chance to succeed. The prevailing fear of deportation is a tremendous problem right now for the immigrant population.

3) There are clear political differences in how people view solutions although there is broad agreement that change is needed. Democrats “always” want to help people in need, yet they also want to see statistical studies that show results. We’ve learned that anecdotes are often not enough—we need to show more evidence.

--A key question that was not addressed: How would universal income be funded and what would the consequences be for someone who decides they simply don’t want to work hard, if at all?

The Cultural Revolution We Need: How America Will Turn Itself Around

David Brooks – Op-Ed Columnist, New York Times; Executive Director, Aspen Institute

1) After describing his long standing role as a conservative columnist at the New York Times as “the equivalent of being the chief rabbi at Mecca” (a line he’s surely used before), Mr. Brooks discussed several of the dramatic transformations that he believes have taken place over time in American culture. For example, there is a dramatic increase in alienation that many people feel and a dramatic decrease in trust in society’s institutions. This combination is particularly alarming among a rising number of younger people who have experienced an increase in depression, opioid addiction, etc.

2) Mr. Brooks noted that the “standard” commencement speaker advice has become largely to “live your dream” and that “you do you.” In too many cases, that mindset has kept young people unattached (his or her “you” hasn’t fully formed yet) and the freedom they’ve been advised to seek (e.g., from college debt) has left them unprepared for the challenges of the real world. Over time, they become distraught and eventually revert to tribalism. That tribalism can take many forms but often manifests itself in politics such that people don’t necessarily like their own party that much—but they strongly dislike the other party. As a result, democracy is on the retreat. He noted that for all the apparent successes he covered in the 1980s and 1990s from the fall of the Berlin Wall to the liberation of Kuwait, it was the tribalism related to the Bosnia-Herzegovina genocide that best foreshadowed what was to come.

3) Despite that negative backdrop, Mr. Brooks is hopeful that we are in the early stages of a revival of civic unity that the country hasn’t experienced in over one hundred years. Community civic institutions are a game-changer as he believes they are attempting to fill the void from the crisis of isolation by building communities, healing divides, and restoring trust to once respected institutions. He gave several promising examples, including a recent widespread effort to bring people closer together in Shreveport, Louisiana.  Historically, cultures have changed when a small group of people on the edge of society create better ways to interact. He is leading an Aspen Institute initiative to help find ways to do just that by reducing the growing fragmentation, alienation, and division around the country.

--A key question that was not addressed: How do we overcome the partisan nature of media/social media, where many people increasingly gravitate to their own echo chambers?

Women Empowerment: Deep Dive: #MeToo—The Movement

Sara Gelser – Oregon State Senator

Ai-jen Poo – Executive Director, National Domestic Workers Alliance

1) Domestic workers, including nannies and caregivers, typically work in highly vulnerable environments where there is no Human Resources department and no co-workers to look to for advice and solace. Harassment is one of many issues. Workers are also subject to other power abuses such as those related to fair wages, overtime, sick leave, and family leave.

2) Women are becoming increasingly mobilized in terms of addressing power imbalances. The level of activism and organization has increased significantly of late. Women are increasingly saying “no more” and are actively disrupting the status quo.

3) In the case of alleged improper touching and harassment by a sitting state senator, the argument was made that this is no time for politeness—that there is nothing polite about sexual harassment. That is part of the culture that has to change. Video evidence was particularly helpful in this case.

--A key question that was not addressed: Where does due process fit in for those accused of improper conduct?

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