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Comment by dzink | Hacker News Reader

You have to understand how gears shift from there. Trust is essential for business transactions and specifically for long term investments. You can’t make massive leaps in technology or medicine or many other areas without trust (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).

Now if you are in a high trust society, you may have a lot of leveraged businesses or governments who have gotten loans or permission to do something based on past trust history. If the trust degrades systematically Investors may want returns faster, or interest rates go up, or partnerships don’t happen. That’s why low trust places don’t grow as fast - trust is the oil for growth engines and lack of it is sand for the same.

Corruption also does a lot of small-profit-for-the-corrupt that leads to massive damage to the overall society via second and third order effects. (example: someone stealing copper cables that stop electricity to entire cities for a while).

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> You can’t make massive leaps in technology or medicine or many other areas without trust

The Soviet Union did manage to get massive leaps in some areas (in particular related to armament, but not only) such as

- armament/weapons

- space technology

- mathematics

- physics

> (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).

I guess you can immediately see how the Soviet Union "solved" this problem by the fact that you simply couldn't gain a lot of money from your innovation.

The Soviet Union was able to innovate in the areas they chose to sink resources into but innovation was clearly not as widespread as evidenced by their decades of stagnation from the 60s onwards.

They were still innovating in military technology in the 80s but analysis since their collapse analysis that they were at least 20% of GDP on defence, if not as high as 40%.

The West managed to match and surpass Soviet military and scientific advances without sacrificing consumer goods or the economic wellbeing of their people.

I am very sure the west sacrificed a lot of wellbeing because of the vast amount of money spent on war. Peace time was great.

Not true. We spent more taxpayers' money on 2008 banks bailout than on every and any war (+ space race) combined.

Also, investing into military tech prevents war on your territory, which is, well, highly disruptive.

According to this [https://www.nti.org/analysis/articles/costs-us-nuclear-weapo...], the US has already spent more than five trillion dollars on nuclear weapons.

Over 85 years and that's an inflation adjusted number. We give away more money each year (USAID/soft power efforts) than we spent on average on nuclear weapons. And neither of those items are of much significance on the US federal budget. Currently, social safety net programs are half of the federal budget and the total military budget is about 1/6th of the budget for reference (that's 2/3rd total between those two parts of the budget).

No. My point is not that something costs more than something else.

Look at a city and the traffic there we know that everything can either feel empty with only a ~8% decrease, or be completely gridlocked with a ~8% increase. Small adjustments in what we spend money on has a great effect. Being destructive is the easiest way to show this. If you bomb a hospital, does that cost ten million USD for the bombs or one billion USD to rebuild and handle loss of quality of life.

CBO estimates $95 billion/year maintaining and modernization nuclear weapons for the next 10 years: https://www.cbo.gov/publication/61362

Total USAID budget: $50 billion in 2023, $19 billion in 2026. https://www.usaspending.gov/agency/agency-for-international-...

> And neither of those items are of much significance on the US federal budget.

$95 billion / year is $620 per US taxpayer.

> social safety net programs are half of the federal budget

I suppose you are referring to the big 3: Social Security, Medicare, and Medicaid. Those are programs that people pay for. In the same way that retirement savings, pensions, and private health insurance is something that people pay for.

But whatever, every dollar wasted to blow up people in another country can be excused because the federal budget includes programs that provide services to people in this country...or something. It is extremely revealing how some people are completely unbothered by some spending and are extremely bothered by other spending. The nuclear weapons don't bother you, but spending a bit of money to help alleviate famine for people in destitute countries is just unacceptable.

Wasn’t the bottom line a net gain?

I'm not trying to downplay their accomplishments, but how much of their scientific advances from the 40s-60s were due to capturing ex-Nazi tech (and scientists) or stealing from the US via their incredible intelligence efforts?

and or lend lease?

Depends on the sector.

They definitely supported a lot of their rocket science from found documentation in Peenemünde et. al. (The personnel OTOH did its best not to fall into Soviet hands, and most of them ended in America, even though some didn't make it and were captured by the Soviets.)

They had genuine excellency in mathematics and theoretical physics. First, those specializations didn't require much expensive or advanced equipment back then. Second, by their very nature, they were freer from ideological bullshit than other specializations, and that alone attracted many of the best and brightest there.

(I can confirm that even in late-stage Communist Czechoslovakia, very hard sciences were considered an intellectual haven for non-conformists. The ideologues didn't understand them and did not consider them subversive per se.)

On the other hand, biology was under full tyranny of Lysenko et. al. and "bourgeoise geneticists" would get imprisoned in concentration camps and even executed or starved to death. As a result, Soviet biology never recovered to a respectable science again, not even after Lysenko lost his power.

Until today, you will find ex-Soviet textbooks of maths and physics all over the net, and people actually download them and use them to study. That does not apply in most other domains.

> On the other hand, biology was under full tyranny of Lysenko et. al. and "bourgeoise geneticists" would get imprisoned in concentration camps and even executed or starved to death. As a result, Soviet biology never recovered to a respectable science again, not even after Lysenko lost his power.

This holds for "pure" biology. On the other hand, for medicine, in the East Block phage therapy was intensively developed (which in the West was barely done; instead in the Western countries there was an intense development of antibiotics).

> https://en.wikipedia.org/w/index.php?title=Phage_therapy&old...

"In the Soviet Union, extensive research and development soon began in this field. [...] Isolated from Western advances in antibiotic production in the 1940s, Soviet scientists continued to develop already successful phage therapy to treat the wounds of soldiers in field hospitals. During World War II, the Soviet Union used bacteriophages to treat soldiers infected with various bacterial diseases, such as dysentery and gangrene. Soviet researchers continued to develop and to refine their treatments and to publish their research and results. However, due to the scientific barriers of the Cold War, this knowledge was not translated and did not proliferate across the world."

I don't know why you are getting downvoted. As a simple example of practical biology in USSR, the Eastern Bloc basically invented modern doping programs.

I'd rather call this research medical science, and with some exceptions (the Doctor's Plot during the last year of Stalin's paranoid rule), medical science tended to be less policed than biology, because even the top dogs of the Party knew that they could fall ill and require top treatment.

Unlike with Lysenko, where shortages of food for the regular population never demonstrated themselves on the nomenklatura's own dinner tables, there was some feedback mechanism that could not be ignored.

But I agree that the exact border between biology and medical science is murky.

Innovation is a term inherently tied to products sold at markets in product cycles that change over time. I think you're looking for the term invention.

An invention is a new device, method, or way of doing something that did not exist before. Innovation is anything that significantly improves real world processes or products. I believe the literature uses term "innovation systems" regardless of type of economies.

Your examples do kind of reinforce the point being made.

Mathematics and (theoretical) physics are capital-light research sectors. Weapons platforms and space technology were state managed (I.e. didn’t require private sector capital financing).

For a while before the US and other democracies left them in the dust.

Mathematics and Physics maybe but not in a way that benefited the broader society overall.

For business it’s almost a simple as adding another factor to your model: the odds of expropriation by the leader and his cronies.

It does not take a very high number to make most capital investments look really bad.

And you compare that (investing in something new), to instead using the capital to bribe your way into the “system”.

Did you meant to write "You *can't* make massive leaps in technology or medicine" instead of *can*?

I have an unusual perspective here.

In my country the politicians are openly very corrupt. (Well, possibly yours too ;)

Recently there has been a lot of improvement to the infrastructure. I realized that what has happened is, a lot of EU funds have been made available for development, and people are lining up to skim a little bit off the top.

How you say, the incentives are aligned, yeah?

I find myself in the odd situation where for each dollar that gets embezzled, a little bit of actual construction happens. That seems like a force you'd want to work with, rather than against.

I mean yeah ideally we'd get rid of corruption, but haha good luck with that. At least now they're fixing the roads.

Depends on how it happens and what your goal is, it starts with a little bit off the top, and ends with it being the prime goal. Somewhere on that gliding scale people get hurt because a bridge collapses because the money went into someone's pockets instead of construction.

I am not sure the incentives are aligned.

those people fixing the roads are incentivized to do the work cheaply so they can skim more “off the top”

And you still need to fight corruption to some level or it will come to a point where there’s more skimming than work being done

Exactly, sounds inherently unsafe and the work is only done superficially to keep more EU funds coming (like in Hungary).

>those people fixing the roads are incentivized to do the work cheaply

this incentive exists with or without corruption

cheaply as in not meeting standards

without corruption you could do a shitty job once and then you won’t get another contract because you did a shit job

with corruption the quality of the work won’t matter so in the extreme case you can deliver nothing at all and you’ll still keep getting contracts - In my country we call this being “plugged in”

I am from Brazil, and there is a famous politician there that has the non-official slogan of "Steals but Does". He is Paulo Maluf. "Everyone" knows he is corrupt. But people vote for him anyway, because he get things done, and he doesn't engage in certain kinds of corruption.

That is the problem, how you get corruption to go the way you want?

Lots of politicians see Paulo Maluf, and think they can imitate him, that they will be beloved by the public and steal money somehow and line their own pockets, except those are too self-serving or too incompetent to pull that off properly, so they steal in ways that go against the public.

So for example in one city where I lived, one mayor stole the money from the kids lunch, resulting in hungry kids. Another mayor stole ludicrous amounts of money from garbage collection services, the result is that the city ended with debts in the billions while being a tiny city (it has 100k people, yet has debts bigger than cities with millions of people).

Paulo Maluf meanwhile built lots of useful infrastructure that is still in use. (also hilariously he used to brag a lot using the phrase "Maluf that did it!", one time some comedic journalists went to a bridge opening, and asked him who did the bridge, he replied: "Maluf didn't do this bridge. But he did the two roads the bridge are connecting, so there is no bridge without Maluf!")

I would vote for an infrastructure kleptocrat any day over someone that will actually enforce the insane zoning and code law we have here. A big problem in USA is you can only get many building or infrastructure things done maybe if you have millions to "influence" politicians. The opportunity to have a politician rob me of 10,20% of the construction costs and meanwhile actually be able to build a condo or something on my own property would be amazing.

You might reconsider when your richer neighbor paid the politician to block you or build an asphalt plant next to your new condo. It's a slippery slope. Or how about when the fire department starts asking for a little something to keep your condo "safe"

Costing money to block me rather than $0 is an improvement.

I have no fire department where I live, nor really any effective police. We don't have public infrastructure nor public roads or anything like that. People here do not use public services and our taxes aren't high enough to pay for them, they are almost $0. We do have zoning and codes, but that's sustainable only because it's funded by enforcement fines, otherwise you're on your own.

The copy part sounds a lot like Cargo Culting.

Copying the visible behavior but not doing the actual part that matters.

Also incredibly common in corporate.

In a sense, he is not unlike a high ranked executive or business owners. These people usually demand high pay for their work because of how important their decisions are for the well-being of the company.

Same idea here except that it happens under the table. Elected officials usually get a fixed pay, and often, it is not that high compared to the importance of their work. What Paulo Maluf is proposing is essentially "I am going to pay myself well (through corruption), but I will do what's best for the city".

At some point the process to prevent corruption costs more than the actual corruption. The process to award the contract for the Obamacare website wasn't corrupt, but it cost $700 million and the app didn't even work. In a corrupt system that contract would have gone to a company owned by some official's cousin, and he would have bid $100 million knowing he could pocket 50, but it would have got done because he knows the last thing he needs is an investigation. That's kind of how it works in China.

I like to express this as "if corruption is a price we all must pay we should at least get value for money."

Yeah, exactly. One example of a low-trust society was the US in the decade after 1929.

One of the "innovations" in the bank runs of 1929 was that a farmer or business owner would lose all their savings in the bank, because of the bank run.

However, the loans they owed to that bank were still good, and would get bought by an "investor" for pennies on the dollar. They no longer had their bank account to make their normal loan payments from, yet the full repayments were still due, despite the original bank that made the loan going under and closing its doors.

So many farmers ended up having to sell or foreclose on their farms and then attempt to rent them back from the new owners.

I'm sure that happened at least once, but most of the time it didn't. This is where the concept of the penny auction came from. Those were far more common. Basically locals prevented outsiders from bidding in foreclosure auctions by either tricking or physically preventing them from getting to the farm (where the actual auction was held). Then the original owner bought the farm back for a few pennies as there were no other bidders.

Excellent insight. Trust is key for capitalism. And for functioning democracy. When trust is lost, whether in the system or in your fellow citizens, everything begins to suffer.

I think of society as an extended family. If you do not trust your spouse, many things in your home simply will not work.

Your example isn't corruption. That's just crime. But it does do massive damage.

I’m confused. Corruption isn’t crime? I know white collar crime was controversial 100 years ago, but are we back to arguing whether corruption is crime or not?

> Corruption isn’t crime?

Societies have very different opinions which kinds of corruption are perfectly fine, and which kinds are criminal.

Corruption is crime but not all crime is corruption. Stealing copper isn't corruption.

Not all corruption is crime either as any ex politician earning mid 6 figures for a speech could tell you.

Not all corruption is crime, but prob ought to be put into the laws to become crimes

> You have to understand how gears shift from there. Trust is essential for business transactions and specifically for long term investments. You can’t make massive leaps in technology or medicine or many other areas without trust (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).

I am not quite sure, how exactly you mean "trust". For example there are countries, that I would consider quite corrupt, but that are able to leap ahead. I would say there can be a lot of trust, even in a corrupt system, if the ones making the leap, are part of the corrupt system, and trust that system to continue to "work". But you could say: "Well, then there is trust!"

Ultimately, I think where there is more trust, there is more to destroy, so any betrayal of this trust, causes more damage, than in a low trust environment, where there was not much trust to begin with.

When you say leap ahead do you mean leap forward of their current position or lead ahead of competitors in the world?

I would agree many countries are making progress but I would contend they are mostly closing the gap. I don't see countries advancing far above the pack while being extremely corrupt that hinders their ability to progress beyond the rest of the advanced nations.

Are we living in the same reality?

Look at how business works in the rich west works. Everything is formalized with contracts, risk is portioned out and offloaded to every party under the sun. You bring in people with licenses and accreditation, 3rd party consultants, etc, etc. All of this work and expense is incurred so that if things go wrong then the parties all have precisely defined ways in which they can (expensively) drag the matter through a courtroom and whatever comes of that will be enforced with state violence.

Contrast with (certain parts of) the far east and eastern europe. The west is the low trust environment.

Your response just proves his point. All of that paperwork, all of those contracts- that assumes you can trust the government to fairly enforce the law.

In a society where corruption rules, you have no reason to spend time and money on any of that because you know you’re one bribe away from it all being kindling for your next bonfire.

So yes, in areas with high corruption they don’t bother. They either just set aside some cash to pay off whatever official they need to if things go sideways, or they hire the local judge’s son to an empty position of power so that they can win anything that goes to “court”. That’s not a sign of high trust, that’s an acknowledgment there’s no point in bothering.

Lawyers in the west are a high status career, because we trust the rule of law. In China, its considered a joke career. What is the point of being a lawyer, when relative position, influence and power within the CCP is the lone factor in winning a case? Big companies all end up with shadow positions that are there just to pay money out to CCP honchos and their kids. Board positions and executive positions go to the CCP.

That's nonsense. No matter how corrupt the CCP is, it cannot have a stake in all court cases in China. Maybe politically sensitive trials are a farce (arguably that's the case in much of the West too, but that's a different story) but that doesn't make the profession as a whole a joke.

The central government in Bejing doesn't care even a little bit about some property dispute in Henan but there's a local apparatchik who cares or who could be made to care with the right consideration.

This is from my Chinese wife, basically by "joke" I mean its not the top students who are going into it. You don't become rich becoming a lawyer. The top students in Schools join government, become Engineers, do Business, etc.

And that's exactly what's happening here too, starting with the high-powered law firms who settled with Trump when he sued them instead of fighting. Overnight they ruined their reputation, because who is going to trust them when they folded so easily to government pressure? Moreover, as Trump's will becomes law, literally everything they went to school for becomes moot. All their experience about intellectual property or contract law or whatever is worthless when the law is actually whatever the guy in charge wants on any given day.

> In China, its considered a joke career.

Is there a source for this or is more of a vibes thing?

source is my wife who spent the first 25 years of her life in China. So I guess vibes? But she was/is pretty academically rigorous, so I believe her.

So I would caveat it as if you are a really good strong student in China, it would seem that you are much more likely to go into Engineering, Business, or Join the CCP. Its not an A student type of career, more of a B or C student.

It's widely believed in Western society due to the language barrier to access Chinese social media.

But it's not true , or only half true 30 years ago. I personally know 3 or 4 of my alumina abandoned their expertise of Optical Engineering to pursue Lawyer career 20 years ago and made big money.

Another example is one of celebrity law professor (not lawyer though) who recently got involved in a controversy because of Epstein file. He shut down his “weibo" (a Chinese Twitter ) account. He also made tons of money. https://en.wikipedia.org/wiki/Luo_Xiang

China moves very fast compare to the western society. Something true today might not be true 3 years later. Let alone half-truth 30 years ago.

> It's widely believed in Western society due to the language barrier to access Chinese social media.

> But it's not true

Is it even widely believed in the west? I'm European and my idea of China is that it's the home of Confucianism and legalism and that bureaucracy, the state and the law are all taken seriously there.

I feel like that's breaking down in the west. I've seen more and more news articles describing someone as a "well-connected lawyer." The idea that the most important things that a lawyer possesses is connections to people in power is becoming normalized.

When I was young I remember people describing Alan Dershowitz as "the greatest legal mind in America." The idea was that he got his clients what they wanted through fiendishly good logic and argument. Of course we now know that he just knew who to send poorly-written emails to.

I'm of the opinion that most legal judgements and arguments (especially at the highest levels like SCOTUS or circuit courts) are just post-facto rationalization of the outcome they want. Any superior logic and argument is just a reflection that such minds tend to be more cunning at access the inner workings of power if they weren't already born there.

Mid-century I think judges were more committed to "fair and honest application of the law." This actually led conservatives to rage against judges who would "become liberal" on the bench. The quintessential example of this was Chief Justice Earl Warren (appointed by Dwight Eisenhower) but there were may other cases like Justice Souter (appointed by George HW Bush).

So conservative groups started developing lists of "ideologically reliable" judges who the Republicans were supposed to appoint. Reagan and HW Bush would negotiate with these groups that they would appoint a judge from the list followed by a more "normal" judge, splitting their appointees between hardliners and institutional jurists.

Clearance Thomas was one of HW Bush's "hardliner" appointments opposite Souter. In the Clinton era, Thomas was frustrated at the pay SC justices received and threatened to resign to make his fortune in private practice. To prevent this conservative activists started showing him with gifts. His main benefactor was mega-landlord Harlan Crow.[1]

This more than anything started the eara of "justice for pay" in America, where the purpose of getting on the bench was to be ideologically reliable, partisan, and to make a fortune off of the people coming before the bench.

https://www.propublica.org/article/clarence-thomas-money-com...

Those "gifts" seem like they should've been considered bribes, with hard time consequences for both briber and bribee.

I certainly do not believe the Rule of Law matters at all in the US, even if we ignore the current administration. US courts have been corrupt for many decades, if not longer, and the only thing that matters to US cops and courts is extorting civilians for money. People with money to spend on lawyers get off easy every time, people without money for lawyers get fucked every time.

In places where you can’t trust courts, you see organized crime fill the gap - goons start enforcing rules for the bad guys and there are no individual good guys big enough to stop an army of well paid goons. With tech enabling every kind of surveillance in the US, that could be a very dangerous combination (bad guys get privacy, while normal people can be ripped out of their homes).

> contracts

Are you assuming that the foundation for those, Rule of Law, is alive & healthy in an autocracy?

In societies where the government is corrupt, or even where the courts are slow and expensive, people then trust in the individuals becomes more important.

Being able to rely on being able to enforce contracts means you need less trust in people you do business with.

If a person or an organization can "trust the government", that means they don't have to trust their business partners that much, and don't even have to bother with a lot of contract language, since the government will force the other party to general legal norms and to act in good faith.

If the government cannot be trusted, or rather, can be trusted to be biased and corrupt, then - a person or an organization needs a lot of trust in their partner, and writing contracts is, like you say, not very interesting.

But actually, I would say it's the middle ground, where trust is partial, is where you see long and detailed contracts with provisions and indemnification clauses and long definitions and long lists of corner cases etc.

Western Europe is a low trust environment compared to the beacons in (cultural) East Asia, like Singapore. I can leave my kid with an iPad in her hand here without fear of it being nicked, like in London.

But business wise, western Europe is still relatively high trust. I suggest you read more about this.

Singapore is also an island that is ~twice as wealthy as the UK per capita. I believe you in general but I'd love a lower-income country that could be true for.

High trust builds wealth - thus what you ask is a direct contradiction of the thesis. There is a lot of 'well' and details of what high trust means, but low trust doesn't allow for many wealth building investments - there is no possible way to make a better life (money is only a proxy) so few try and those that do are worse off.

The causation likely goes both ways.

Singapore was high trust before it become wealthy, though.

The framing of "low trust" vs "high trust" is useful but another important distinction when conducting business in different jurisdictions is whether *institutions* or *counterparties* are more trustworthy.

If institutions such as courts are trustworthy (in that they will impartially adjudicate contracts and help you enforce their terms) then you are able to work with a wider spectrum of counterparties who you do not yet trust. You just have to document and hedge against the risk via contracts and insurance, as you point out.

If institutions such as courts are absent, corrupt, or otherwise captured then you must ensure that you only interact with counterparties that you can trust or have direct leverage over. Perhaps ones with which you share personal or reputational connections.

These are for high stakes business, and even those are based on a lot of trust. If you commit a minor crime, where the cost of settling things is lower than what you'll get, it's easy to get away with it. It requires a great deal of trust on the individual level that many perpetually developing countries lack.

As the US transitions into a high corruption / low trust environment, business investment disappears.

Trump tried to solicit bribes from anthropic, retaliated by violating the DoW contracts when they didn’t pay, and then somehow forced Dario to publicly apologize for bringing the matter to light. Do you really think this is how the US will win at AI?

Look at the car industry, where the corruption and coercion started earlier. For some reason, Trump used ICE to illegally detain a bunch of Kia engineers. They announced they’re not going to add more trimlines to their EV lines in the US.

Honda announced they’re canceling planes to build three new model lines in Ohio.

The macro statistics are dire. Pre-Biden, US factory investment was $80B per year. Trump wiped $30B off that number in 2025. Biden got it up to $240B, so Trump “only” wiped out 10-15%, but, because he was starting from a high number, the damage is equivalent to 35% of all factory investment that existed when he last left office!

The rate at which industrial production is fleeing the US is increasing. This year, the loss will probably be greater than the entire 2018 US factory investment base.

There are similar trends happening in tech and academia. There’s not much left once that happens. (Insurance, banking and marketing, mostly.)

"Do you really think this is how the US will win at AI"

Define "win at AI". Because this kind of idea seems more at home in some fact free political discussion. Many models are already open. Anyone who can get GPUs can run them. Its hard (for anyone) to win in a nationalistic sense when that's the case. That being said, I really don't like Dario but I still don't want him to be exhorted by the government.

PS take your meds, the numbers you present are clearly a fabrication.

PPS Interest rates are the most important factor influencing the amount of industrial investment in the US...always have been.

This is the difference between personal trust and a high/low trust society. Personal trust is about how much you trust an individual in the absence of enforcement mechanisms. But when looking at a society level those enforcement mechanisms matter. A high trust society could theoretically have extremely low personal trust and still be a high trust society because the enforcement mechanisms are strong enough.

Although in reality high trust softies tend to have higher personal trust (both as a cause and effect). The presence of functional enforcement mechanisms is not evidence of a lack of personal trust.

> Look at how business works in the rich west works. Everything is formalized with contracts, risk is portioned out and offloaded to every party under the sun.

Sounds like formalized corruption to me.

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