Fragile Infrastructure and Global Economic Risks

Where does President Trump's speech leave us with regard to where the war is headed? And it really was to me the story of the commander-in-chief who weeks into this war is deeply uncertain about how it ends. I'm John Finer, co- host of the Long Game Podcast. This week, Jake Sullivan and I break down the president's speech and discuss what it's like to negotiate with the Iranians. We will also debate whether Iran should accept a deal. The episode is out now. Search and follow the long game wherever you get your podcasts. Wharton professor Ethan Mollock says that with AI, his students are doing a semester's worth of work in just a couple of days . In Moloch's classroom, AI is required. I'm Henry Blodgett, and this week on Solutions, I talk to Professor Mollock about how he's radically transformed how he teaches and how he continues to test the boundaries of what AI can and cannot do. Follow Solutions with Henry Blodgett to hear our conversation. I'm Scott Galloway, and this is No Mercy, no malice. Since the start of the war with Iran, we've been fixated on the Strait of Hormose . But in a globalized, digitized world, geographic features aren't the only choke points. Choke points, as read by George Hahn . When you compress the carotid arteries, you cut off the flow of oxygenated blood to the brain. This causes unconsciousness in approximately 8 to 15 seconds due to cerebral hy poxia, oxygen deprivation to the brain . Globalization has expanded the economic corpus, resulting in an interconnected world and yielding huge, though unevenly distributed, prosperity. It has also formed carotid arteries the size of wait for it, the Strait of Hormuz . In nineteen eighty four, a forgettable made for TV movie contemplated a Middle East conflict that closed the Strait of Hormu z. For decades, U.S. strategic simulations have explored similar scenarios. In one two thousand two war game , the Red Team, deploying asymmetrical capabilities, including armed speedboats, decimated American naval forces in ten minutes, effectively closing the strait. Why didn't the Trump administration anticipate this entirely predictable scenario? A . Despite a warning from the chairman of the Joint Chiefs of Staff, the president determined that the regime would capitulate before closing the strait, and that if it didn't the US military could reopen it. He was wrong. This may be the greatest intelligence failure since CIA Director George T ennett famously told Bush it was a slam dunk case that Iraq had weapons of mass destruction. But let's put aside the choke point almost everyone saw coming and discuss some others we choose to ignore . Last year, one company conducted eighty four percent of US space launches and fifty two percent of global launches. SpaceX . Almost two-thirds of the satellites orbiting Earth belong to the company, but it really dominates in low Earth orbit, where it owns ninety-one percent of communications satellites. If you're connecting from a cellular dead spot, going online while flying one of thirty plus airlines, out on a boat, or operating in a war zone, you're at Elon Musk's mer cy. He recently combined SpaceX with XAI at a valuation of $1.25 trillion , registering a 43% equity stake and This week, SpaceX filed to go public, seeking to raise $50 billion to $75 billion , meaning Musk will likely be come the world's first trillionaire. He says he's creating the most ambitious, vertically integrated innovation engine on and off Earth with, AI, rockets, space based internet, direct to mobile device communications, and the world's foremost real-time information and free speech platform . In other words, a global communications and inform ation choke point . With Musk, sometimes you get doctor Jekyll, electric cars, reusable rockets, and medical breakthroughs for treating blindness and paralysis. Other times you get Mr. Hyde, bullying a judge, Nazi salutes, and AI porn . Is Jekyll or Hyde the real El on? A yes . As author Robert Carrow, who's written four volumes on power through the lens of LBJ, observed, power doesn't necessarily corrupt, but it always reveals . When you are climbing to get power, you have to use whatever methods are necessary and you have to conceal your aims, Carrow told the New York Times. But then when you get power, you can do what you want, so power reveals . Musk is, according to the W all Street Journal, addicted to ket amine, determined to father a legion level of offspring before the apocalypse, and, no surprise, perpetually engaged in custody battles. He also sleeps with loaded guns next to his bed. Is this the person we want at the epicenter of space, connectivity, AI, and media? A no one person should have this much power . I have no idea what Musk intends to do with his power, and that's the scary part. He's unelected and answers to no one, as we now live in a society where billionaires are To paraphrase Richard Pryor, ketamine is a hell of a drug. I tried it once under therapeutic supervision. Shit got real and unreal fast . As Shayla Love wrote in The Atlantic, excessive use of the drug can make anyone For most people, the danger of that delusion is contained inside a relatively small blast zone, the addict, their friends and family, their world. In Musk's case, his world is our world . Last weekend, an estimated eight million Americans participated in No King's protests . The rallies speak to the moment, but the demonstrators concerned are as old as America. As James Madison wrote in the Federalist Papers, number 47 : the acc ationumul of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self appointed, or elec tive may justly be pronounced the very defin ition of tyranny . After fighting a revolution against a monarch, the Constitution's framers split power across three branches of government, devising a system of checks and balances to put each branch in tension with the other two. Cumbersome by design , we spent the next two hundred thirty years reassembling the king . The Constitution grants the power to tax and regulate foreign commerce exclusively to Congress . But according to Duke Law Professor Timothy Meyer, functionally trade policy has been dominated by the executive branch since the 1930s. The War Powers Resolution of 1973, sold as a check on Richard Nixon after revelations that he'd secretly bombed Cambodia, actually codified a 60-day blank check for presidential Meanwhile, the 2001 authorization for use of military force, passed one week after 9-11, has been cited to justify classified Congress has never declared war in my lifetime, but we've fought many, and we're fighting one now. On paper, our system was built to avoid choke points by distributing power. We built one anyway. It's inside the Oval Office. For the past century, as we seeded powers from the legislative and judicial to the executive branch, we've been hoping nor ms would help us avoid strangulation. And it worked until it didn 't . Last October, a database glitch in Northern Virginia took down Snapchat, Fortnite, Ring Doorbells, Coinbase, Red dit, DoorDash, and about a thousand other services. The culprit was a malfunction at an Amazon Web Services data center, the third major outage tied to that Down Detector received 6.5 million outage reports. Three companies: Alphabet, Amazon, and Microsoft own two-thirds of the cloud market. These service interruptions rarely result in clients switching providers. Leaving is too costly and time-consuming. After a perfect storm of bad code and a widespread Azure outage knocked airlines, hospitals, and banks offline in 2024, one cybersecurity expert said , This is a very uncomfortable illustration of the fragility of the world's core internet infrastructure . If you're under thirty, that fragility is your lived experience. That's what makes the cloud such a potent choke point? It's hiding in plain sight until it isn't . Mistakes that cause outages are one thing, but attacks from malicious actors are the bigger threat. Since two thousand five, thirty four countries have been suspected of sponsoring cyber operations with China, Iran, North Korea, and Russia accounting for a combined 77% of suspected attacks . Since the start of the US Israel war on Iran, Iranian hackers have hit a medical technology company, stolen and tried to sell data from Lockheed Martin, and breached FBI Director Cash Battel's personal email. Even more chilling is the emergence of a gra y zone between war and peace, i.e., permanent cyber war ? As a 2022 Atlantic Council report explained, without firing a single bullet, U.S. adversaries are striking at the fibers of U.S. and allied societies, economies, and governments to test confidence in systems that underwrite both the U.S. Constitution al Republic and the U.S.-led rules-based international order . In other words, every day unseen hands reach across cyberspace and apply pressure to our air supply . When we gasp for air, however, we demand an immediate patch rather than insisting on redundant airways. The Islamic Revolutionary Guard Corps is demonstrating a lesson we should have learned watching Ukraine repel Russia for the past three years. An 8$2 million fighter jet launched from a $13 billion aircraft carrier is an economic Goliath facing a swarm of $20,000 to $50,000 Davids, i.e. Shahed drones . While we're bleeding resources and credibility, China is taking notes and looking at Taiwan . The single biggest threat to the world economy, the single biggest point of single failure is that 97% of the high-end chips are made in Taiwan, Treasury Secretary Scott Besson said at Davos this January . If that island were blockaded or that capacity were destroyed, it would be an economic apocalypse . One company, TSMC, controls 72% of the global foundry market, producing chips for AMD, Apple, NVIDIA, and Qualcomm. If China invaded Taiwan, global GDP would sustain an estimated 10% hit, according to a Bloomberg analysis . But China doesn't need to invade Taiwan or blockade it. They just need to flex . Military exercises, missiles splashing down in shipping lanes to spook maritime insurance carriers, a cyber operation that takes TSMC offline for 72 hours, and watch Silicon Valley and JP Morgan scramble to de-risk . The problem is there's nowhere to scramble too. Despite Biden's carrots one hundred fifty two billion dollars in ChIPS Act spending and Trump's sticks tariffs, the soonest the US can expect to have meaningful backup capacity is 2030 . We've kept China at bay with a mix of globalization, strong coalitions, and military deterrence. The bulwark of allies defending our most critical technological choke point took decades to build, but only a year to disassemble with incoherent isolationist economic policies , insults, and now a war that exposes the gaps in our armor . The Strait of Hormuz , One Man Satellite Network, an autocracy cosplaying as a government, three cloud providers, one island . We didn't stumble into these choke points. We built them. The invisible bipartisan hand of the market has been wrapping itself around our throat this whole time . We mistook shareholder value and purity tests for resilience, finding welcome distractions in big tech earnings calls and arguments over prono uns . fe is so rich.