The on-going collapse of the global commons

Danny Crichton:

Hey, it's Danny Crichton and this is the Riskgaming Podcast by Lux Capital. That we are in 2025, the second quarter of the 21st century and that means that every firm in the world is launching their top risks, every insurance firm, investment bank, geopolitical strategy firm, etc. One of our favorites, of course, is the Eurasia Group with our friend Scott Bade, who's been on the podcast multiple times and he had an important risk that I wanted to talk about more. Scott is a busy man, so in lieu of Scott, we are getting our second best favorite person on the podcast and the person we actually pay to be here, Laurence Pevsner. Laurence, thank you for joining.

Laurence Pevsner:

Thanks for having me, Danny.

Danny Crichton:

So Scott had this kind of a pullout box quote in the Eurasia annual report and what's basically about the decline of the global commons. The idea here is whether you're talking about space, whether you're talking about the sea, cyberspace, whether you're talking about land, there seems to be this contention of things that were formerly safe are no longer safe. So we've seen Russia shoot down a plane just in the last couple of weeks over its airspace. We've seen Chinese trawlers, Chinese ships, trawling in the North Sea and elsewhere knocking out internet cables. We've obviously seen major attacks as well in cyberspace, Salt Typhoon, et cetera. And so it seems like things again that we're formerly safe are increasingly unbuckling, disintegrating and are becoming less safe. They're not becoming a global commons anymore. How do you feel about that?

Laurence Pevsner:

Well, when I was in government, the term of art that the bureaucrats would use was the rules-based international order.

Danny Crichton:

That's thick.

Laurence Pevsner:

Yes, that was the phrase that everyone liked to toss around and say, "We must defend the rules-based international order," or some variation on that theme. And the reason we felt like we had to defend it because we could see that it was actually crumbling. That another way of thinking about the rules-based international order is all of the things that came out of World War II, this sort of setup of governments to be able to coordinate, okay, we're not going to have another World War again, and beyond that, we're actually going to cooperate along all kinds of global issues.

And that leads to the globalization and perhaps neoliberalism is the term that people use in the economic sense here. And right now, I think both of us agree that whatever that was, whatever phase of our politics was is starting to turn. And you could feel this for the past four years, and it certainly feels true now with the rise of Trump and also with all of these clashes and wars springing up around the world. I think that this is definitely a real trend and it's the kind of risk that in some ways, it's the potpourri. It's like, oh, anything could happen. It could be in Antarctica, it could be in space, it could be in the sea, but that's because the aperture of risk has expanded quite a bit.

Danny Crichton:

For those who have followed the podcast a very long time and by that I mean have listened to me on equity, I'm going to annoy our producer, Chris Gates, who has been with me for a very long time. I don't do dad jokes as often as I do at TechCrunch because it'll really annoy my co-host there. But I will point out that the rules-based international order or RBIO, if you could come up with a U, RUBIO, I think our new Secretary of State Rubio would really enjoy continuing to use that phrase. That's your dad joke for today.

Laurence Pevsner:

Well...

Danny Crichton:

Our producer right now is on the floor, very angry at me. This is probably going to get edited out. That's how we're doing these podcasts anymore. This is a fun show. Chris, don't cut things. I swear you from cutting this out. That was a great joke. I came up with that on the spot, unprepared, no notes. 10 out of 10.

Laurence Pevsner:

It's very good. And maybe it'll actually convince Rubio to embrace his former self. When the Rubio pick was announced, people were like, "Wait, are we actually getting an old school thing? Are we going to get the rules-based international order?" And then all the other picks were like, "No. We're not."

Danny Crichton:

Exactly. But to your point, so 1945, obviously, we have this rise of a number of major international institutions. So we have World Bank, IMF that comes out of this. We have the UN that comes out of this. We have not just global organizations, but on the ensuing decades, you had the Outer Space Treaty, the demilitarized space, which was really, by the way, a trigger of the United States worried about the Soviets less than the other way around. We were worried that after Sputnik, the Soviets were ahead of us, they were going to put nukes in space, and we would sort of have this veto that we would never be able to overcome. And so we demilitarized this, we demilitarized Antarctica.

So Antarctica up until recently was not allowed to have any sort of military soldiers. That has changed. We're seeing the same thing with cyberspace. ICANN was owned by the Department of Commerce, distributed global domain names, and increasingly, that is under pressure from all kinds of different groups in cyberspace as well. You worked at the UN. How do you feel about some of these older institutions? When I say old, I mean just venerable institutions that have been around a long time. Are they buckling under this pressure?

Laurence Pevsner:

Yeah, I do think that they are struggling. One of my first post when I arrived at Lux was for the Riskgaming Newsletter, I wrote a vigorous defense of the UN. I still do believe that the UN is quite important and serves a very valuable role. I'll also say that when we first arrived at the UN, the very first thing that our team did was look at who's on the security council and how do we make them feel good about us? We were trying to build up our allies, get those partnerships so that when the tough votes came down the line, we'd put in the work, very simple, basic one-on-one diplomacy. So we'd schedule trips to the countries that were on security council. We would try to understand what their positions were, see if we could curry favor in some way. Notice in this transition, two of the countries who are on the security council, two of the very small council, Denmark, who of course, Greenland, of which is a part currently, and Panama.

Danny Crichton:

Oh, good. Oh, that's great.

Laurence Pevsner:

So clearly the next administration is taking a different approach to the UN.

Danny Crichton:

When you think about the buckling, obviously part of the buckling here, it's not just from the US although we can always look at ourselves and be solipsistic. The other side of this is there's a rising and emerging group of countries, China, India, Indonesia, Nigeria, go down the list, both from a population perspective, economic perspective, that when you go back to 1945, the US was the absolute dominant economic power in the universe. I think it's as high as 80% of global GDP or at least global manufacturing GDP was from the United States. That is obviously way down as other countries have grown over the years.

And so do you think, and it's not just the UN, but a lot of these institutions that were built out, World Bank, IMF, the US gets to choose the president of the World Bank as the US designated president. The IMF is offered to the Europeans to a point that China, which has donated, as well as Japan and other Asian countries, were saying, "Why don't we get a selection here?" And so you end up getting the Asia Infrastructure Investment Bank, the AIIB, which sort of has disappeared over the last couple of years from the press. But as an alternative institution to try to say, "Hey, we deserve a seat at the table. We need these institutions to be updated and they're not getting updated."

Laurence Pevsner:

Yeah. One of the biggest pushes when I was at the State Department at the UN was to actually try to institute some reform. We had a big push, a big platform where we did a listening tour. We talked to many countries about what they want to see. They all want to see some dramatic kinds of security council reform. They just can't agree on what. You might say, how many permanent seats do you think should be added? Should there be more permanent seats, fewer? It's a very complicated discussion. And the fact of the matter is that just speaking very candidly, even if the US were to get on board with some of these, Russia and China would absolutely not, and vice versa, maybe China has a proposal, but it's not one that we would be able to swallow. So everyone knows that security council is calling out for reform, but you're not necessarily going to get it.

Maybe this is actually not such a bad thing. We are shifting from a unipolar to a multipolar situation. And the important thing is that we still have a place to go. So the Eurasia Group's call-out box was called the shrinking of the commons. But fortunately, a lot of these major players are still choosing some of those same commons when they're available. So at the UN, China was considering for a while building their own system, having a separate international system, but instead they said, "You know what? No, actually we do have a seat on security council. That's quite powerful. Let's start leveraging that instead and get involved in this system." And it's up to us whether we still stay involved or not, but that's where it's going to be happening. And so as there are fewer and fewer of these spaces as the common shrinks, I think it's even more important that we get even more involved in those spaces where we actually meet with other countries.

Danny Crichton:

Now, one of the interesting things in the last couple of weeks, so I mean, there's obviously these big institutions that are very powerful. They've been around a long time. But there are other institutions, particularly those notable in Silicon Valley and the tech industry, institutions like open source institutions like the global information commons of the way we communicate with each other that are also under additional attack. How do you feel about some of these institutions? So technology institutions where we had this openness of global exchange, we had this openness around open source and code, and there are more, in some cases, more restrictions. In some cases, we're taking restrictions off so there's less "censorship" or moderation on some of these online discourses, which tends to mean some people get their voices amplified versus others. How does that adapt?

Laurence Pevsner:

Yeah, I think it's a really hard problem. And additionally, there's people leaving Twitter or X now to go to Bluesky, and so then you see a polarization of the different social media sources. That polarization, it means that we're not talking to each other anymore. We see the same thing in the media. We were talking earlier offline about how there are more paywalls on all kinds of different publications now. I was thinking about as we record, the wildfires have just subsided in Los Angeles, but they might come back. And a lot of people were saying it's really frustrating that a lot of the coverage, if you wanted to know about the wildfires, was under a paywall.

So if you were within an emergency and you had to see, "Oh, where should I go? What should I do? Let me turn to my newspaper. Let me turn to a trusted source." Those trusted sources are like, "Well, you have to pay us some money to see it." Now those trusted sources would say, "We have no other way to operate."

Danny Crichton:

Right.

Laurence Pevsner:

"We're getting hosed. We need to make money somehow." So it's a really difficult problem. I don't think anyone is trying to be a bad guy, but it just feels wrong to not be able to immediately, for free, access important information like that.

Danny Crichton:

And I think with the rise of AI technologies, we're seeing more and more people substitute critical thinking, substitute like the old building on the sediments into the palimpsest of information so that each layer of the doc, so to speak, whether it's an article, an essay, a piece, was sort of guaranteed and you knew everything that was going on behind it. Now, AI is sort of just dumping in. And I'm remembering we had a podcast, I want to say last year, with Eric Newcomer and Reed Albergotti. Eric Newcomer, obviously of Newcomer. That's easy. And then Reed Albergotti had seen before, and we were talking about the future media and business models. And look, some media sites, I think the New York Times, LA Times had made their wildfire coverage free, so it's like outside the paywall. The Financial Times has always made their COVID coverage free.

Sometimes they're doing this as just making a point of like, "Hey, we have this great content. Take a look at this. Please sell and buy for our hedge fund coverage." But I do think that there's this question with more layoffs coming out in the media industry in the last few weeks of what does our information comments look like? Even just out of social media, it's one thing to just be able to commentate on the internet. Another, the fact of just getting raw facts. What is actually happening in the world is getting harder. And while I am on X and regularly tweeting and communicating with all kinds of folks and DMing, et cetera, the reality is around wildfires, it was really hard to understand what was going on. The feed was just not filled with correct information. It was filled with tons of people who probably don't even live in the United States commenting on something they've never visited before. And that was really shocking to me.

Laurence Pevsner:

Yeah. This is the challenge with something like Community Notes, which is Zuckerberg was saying, "Oh, it's a really good model, Community Notes." But it's slow, right? It's a very slow process. And so by the time that you actually get everyone to weigh in and say, "No, here's the fact check," thousands of people, maybe hundreds of thousands people have already seen the false content. So I think that that's a real challenge. And what I was thinking as we were discussing is, okay, if we're thinking about there's this global shrinking of the commons, whether it's at the UN, whether it's in space or in the sea, then there's also a digital shrinking of the commons, this bifurcation. We're also seeing, by the way, legacy media as it goes downhill, there's a bifurcation in terms of the lots of independent media, right? People going on Substack. Everyone's starting their little journalist program, their one-offs, which is great, but it means there isn't one place where everyone is coming to discuss and share and see different viewpoints, that kind of thing.

And then going back to the newsletter you recently wrote about Derek Thompson's cover story in the Atlantic, there's another shrinking commons, which is literally on the human-to-human level meeting up in person at all, right? There's that decline of the third space, whereas the space besides work and besides home where you can actually gather with people, there's the final conclusion of Robert Putnam's Bowling Alone, where the bowling clubs are gone. By the way, that actually sounds like a ridiculous acronism now, the idea that you would go to a bowling club. What are you talking about? People feel like there are fewer and fewer options to actually gather communally. And that, of course, was impacted by COVID, by everyone shutting down. But then we're trying to relearn how to be with each other again. And it's hard.

Danny Crichton:

Well, I'll say as someone who was a varsity bowler, which I will say is the absolute coolest sport you could be in high school. I was both varsity bowling and then varsity quiz bowl, the double bowler going on.

Laurence Pevsner:

What did you average in a game?

Danny Crichton:

I got to around like, 220, 230. I was not particularly good. There were definitely people who were like 250, 270 and not professional I met. I did not put enough time at the bowling alley because at some point, this place stinks. You know?

Laurence Pevsner:

I always think about how dirty the holes of the bowling ball must be.

Danny Crichton:

I owned a ball. I owned balls.

Laurence Pevsner:

Yeah. So it was your own ball.

Danny Crichton:

But I did own like four. At some professional levels, you do have to have different balls. They have different... The constructions and they can do different things. So your 7 and 10 pins are still available. You need a certain ball to hit both, et cetera, et cetera. So I never got that professional. But yes, that's definitely the coolest sports you can do if you have kids, bowling and quiz bowl, that is how you keep your kids from being beaten up in high school. But nonetheless, I think to your point, we are losing third spaces. So the company that founded this, the company that popularized it was Starbucks. And Starbucks has made it its mission to basically compete with another equity throwback today, Luckin Coffee, of everything's an express take away pickup cup and they have some sort of weird way of writing pickup cup that is probably a trademark, but they are trying to get rid of the third spaces.

And the reason is real estate prices. No one wants to pay the commercial real estate prices. But then also if you're in urban cities rather than suburbs, you also have a whole list of other issues that you have when you have a 24/7 kind of coffee shop that people are trying to avoid. So if you look at the Metreon down in San Francisco I visited for Disrupt like a year or two ago, there are no seats. You could just stand, but they had just ripped out all of the seats out of the entire restaurant whilst keeping it there.

So we are losing a lot of those sorts of groups. And then to your point, if you think of first space, first space is home, second space is work, third space is something in between. First space is in Derek Thompson's piece. He has an architect who's basically describing how living rooms and bedrooms are being redesigned to ensure that you can have the largest plasma screen on the TV on the wall. And so we're completely redesigning the entire space actually, not to facilitate you having friends over, but to you watching Netflix by yourself, drinking wine.

Laurence Pevsner:

It is quite remarkable. And I think quite sad, right? All of these trends that we're talking about, they lead people to fear each other more. They make people unhappy. They tend to spark conflict. They tend to inspire tribalism. I can't imagine a worst set of trends to consider. So I'll ask this to you, our resident optimist, of course.

Danny Crichton:

I was with our good friend Josh Wolf just now who repeatedly asked me about 20 times, he's like, "What's working well in the world? Can you come up with one thing that's working well?" And we ended up deciding that package delivery is working well. When I order something from Amazon, it arrives the next day. And that is unique among anything that I have going on. But you had a question.

Laurence Pevsner:

Right. Yeah. You don't have to go to the post office and pick it up anymore.

Danny Crichton:

Yeah, exactly.

Laurence Pevsner:

I believe it's Kurt Vonnegut who has this great riff about how when he wants to go mail a letter, his wife was saying, "Why do you bother going to the post office to drop it off?" And he says, "Well, I go, because on the way there, I'm going to see a cute dog and I'll be able to ruffle its feathers and I'll be able to chat with an old woman and I'll see interesting things in the shop windows. And I'll have my little envelope in my hand and I'll go to the post office and I'll drop it off and it'll just be a great experience. And life is for farting around." That's his plea. And I think that we could all hear that plea a little more.

Danny Crichton:

If I had residuals from Slaughterhouse-Five, I might fart around more often as well.

Laurence Pevsner:

Fair enough.

Danny Crichton:

But you did have a question for me.

Laurence Pevsner:

My question-

Danny Crichton:

Which you have not delivered.

Laurence Pevsner:

Yes.

Danny Crichton:

Because I keep interrupting you.

Laurence Pevsner:

Well, my question was, okay, who are the winners in all of this? To put our Riskgaming hat on. Who are the people, if we're shrinking on digital, we're shrinking internationally, we're shrinking person to person, who's going to come out ahead given this trend?

Danny Crichton:

Well, look, what do we mean when there's a shrinking of the gold commons? The answer is I think twofold. One is there's a privatization of the commons. So in some cases, like open source, if you think of a company like OpenAI, intrinsic to the name was once they open source research shop for AI technologies, now a private company, not a nonprofit as of a couple of weeks ago, officially making as much money as possible, publishes nothing about its models, et cetera, et cetera. So you see this sort of privatization of all the hundreds of amazing researchers who are over at OpenAI and who are still there, no longer all that is now not just behind a paywall and you just can't access now is a trade secret. So there's a privatization of the commons. And then I think second hand is there's a securitization of the commons, which is, hey, if you are flying over Russian airspace, you have to have different technologies in order to protect yourself.

If you are a ship going through certain areas like the Red Sea or the North Sea, you now need, I don't know, sonar, you need different technologies to actually protect yourself. And then that's obviously most obvious in cyberspace where look, you need to spend a lot of money on cyber defense just to protect your intellectual property, to protect your PII, your personal identifiable information, et cetera, et cetera. So that is the opportunity for the private sector to say, "Look, if you're building the security tools, the detection tools like the standard stack that you have to respond to, that's the opportunity.

That's a positive externality I suppose for industry. It's a negative externality for all of us because areas like space, which were demilitarized, now are militarized. So we are able to spend money to militarize it and protect ourselves, but also our satellites are also at risk. And I will say, this is always my kind of general line, but generally speaking, the US is the biggest beneficiary of a global commons. And I think we always forget how much of demilitarization of space, but we have the most satellites in space. And so militarizing it fundamentally means we have the most assets now that's vulnerable, which means we have the highest tax, the most to spend to protect those assets.

Laurence Pevsner:

Yeah. This would be the argument we'd encounter at the UN sometimes from the Chinas and Russians of the world was, "Yeah, this global system you've got going here works pretty well for you. Not sure why we would support it. It's not working nearly as well for us." One reason you might see it happening on this international scale, a lot of people right now, I think you, yourself included, but don't want to put words in your mouth, think of China as they're going to beat us on so many things. The manufacturing is so much more advanced than what we've got. They really are on the cutting edge of technology in a way that we really need to catch up. At the same time, I think that some of the threat that we get from China is actually from weakness and not from strength. If they were benefiting from the global system, if they were doing really well, then they wouldn't necessarily be poking and prodding so much at it.

You get this sense that six years ago, eight years ago, 10 years ago, everyone would've said, "Oh, China's going to be the biggest economy in the world. They're going to overtake us. They're going to be number one. No question." Now it is very much a question, and they currently are not number one in the world. That was not something that most prognosticators would've seen. And I think that they're dealing with trends like their aging workforce. I think they actually have some forces going against them with that. So they are starting to poke and prod and push and pull because they are actually concerned about themselves.

Danny Crichton:

Yeah. Look, I'm in the minority of folks who say when countries start to use the nationalization card or the nationalist card of saying patriotism like love of country, et cetera, it can come from strength or weakness. And oftentimes it can be the same. So when we look at a country like China, is it because they feel so strong and it's like, "Look, it's our moment to shine. You need to get out of the way," or is it, "Hey, we know the economy is terrible, we need to distract you from that fact. And so we need to make you much more excited about what's going on without you looking at your individual situation. The collective is doing well." I tend to be on the latter is I do think the economy is in the... Can we say shitter on this podcast? Chris has given me a thumbs up on shitter.

The economy's in the shitter. And not only is the economy in the shitter, but look, the government is banning every type of data you can have about the economy. This is not a position of strength is "Hey, you're not allowed to publish what the interest rates are." This is not the strength where just recently an economist was arrested after giving a speech in the United States. That was not a fully positive speech. It wasn't even a negative speech. It was like a neutral speech saying like, "Look, there are problems in the economy," which is an obvious statement in any economy you can make. And on return, was arrested at the airport and has disappeared. That instills confidence in an economy. Would you invest in a company in which the CEO gives a speech and the media is arrested and you don't know why. And they're like, "Don't worry, the company's great. Everything is fine here. Everything's okay. It's like Star Wars: A New Hope and Han Solo's going in the microphone and trying to pretend.

Laurence Pevsner:

I doth protest too much.

Danny Crichton:

Yes. So look, I tend to be on that group. And so the key to me though is when we go back to the United States, it is we should not be just reactive. We can't just look at everything going around and being like, "Well, if the Russians are doing this, then we need to do that." It's not for tit-for-tat because when we're too obvious about this, countries do do that to get the tat from us. And sometimes that is what they're actually looking for. That is the benefit for them. And sometimes you have to be strong and say like, "Yeah, we just have to ignore that. That's not going to happen," or come with entirely, and this is where I think Riskgaming comes in, entirely different strategies of saying, "Well, okay, we're not going to do tit-for-tat. We're going to do tit-for-tot."

Laurence Pevsner:

Yeah. We just had the guest... You're not appreciative. I didn't laugh at your pun enough.

Danny Crichton:

No, no, no. But Chris is on the background. Sorry, I keep bringing you into this suite. We normally, Chris is always in the background, but I keep drawing you into this and Chris laughed. I got one laugh from Chris. No one from our audience.

Laurence Pevsner:

Yeah. I'll defend the audience interest here and say that didn't do that much for me. No. But we just had a guest, Isaac Stone Fish, on the podcast. And one of the things that he said that I thought was interesting was he said, when I asked him, "How do you define war?" and he replied something to the effect of, "Well, the United States gets to decide what it thinks is a war and not." I think that this applies exactly to what you're talking about, where as Russia and China and others or it's the Houthis, who knows? Pokes and prods and tries to get a reaction out of us. We can define the terms. We don't have to always, every time, turn to the letter of the law and say, "Well, in the UN Convention of the Law of the Sea, it says such and such." Right? We can shape our response to it and what we deem important, non-important. We can characterize it the way that we think is advantageous to us.

Danny Crichton:

Yeah. He was talking about acts of war and it's like in some cases, they're obvious and in some cases, you don't have flexibility. So if the Japanese attack Pearl Harbor, thousands of people are dead. If Osama bin Laden attacks the World Trade Center, thousands of Americans die as two examples in the last century. You don't get to kind of redefine that because you know that legitimacy among the public. Now, there's a whole group of actions such as Salt Typhoon, where the US treasury, whether that's OFAC, the Office of Foreign Asset Control, whether it's other parts, CFIUS, was also hacked according to media reports, whether that's true or not. But was that an act of war? That is where you have flexibility because you can choose to say, "Yes, that was," or you could say, "You know what? That was sort of a cold war start. We're going to do the exact same thing in reverse."

By the way, I always say we almost certainly are doing that in reverse. So we just never get coverage of that. And that was Isaac Stone Fish's kind of point was we are at war, we're just not recognizing it because these are signs and we're choosing to sort of ignore it. And I do wonder, we're doing this right before the inauguration. I do wonder how the new administration is going to perceive some of these actions going forward. But it seems clear to me that the global commons is shrinking. It's going to continue to shrink both from external actors. It's also going to shrink because the new administration wants it to shrink. That's sort of intrinsic to the policies on foreign policy as well as domestic policy. And so I think it's a risk from the Eurasia Group, from Scott Bade, our former podcast guest, which is accurate, but maybe we're hopeful.

That's always the fun thing with risks. It's always a 95% chance. Maybe the 5% is we demilitarize everything. Everyone lives in peace. We all have loaves and fishes. I don't know, that's bread and wine. And we have a great time. I've been told to ask, what is working in the world? I'll tell you what is working. French Reds are working and particularly those that are most tannic. And I will say as a final comment here, that is totally irrelevant, but it still pisses me off.

The Financial Times last week or two weeks ago, talked about the fact that French high tannic wines are the fastest shrinking wine in the world for sales because young people do not like tannic wines. They do not like red wines and they don't like imports.

Laurence Pevsner:

I drink white.

Danny Crichton:

You know, that's like a... When you had joined and you had said that during our job interview, you would not be here. And that's not a protected class, folks. We can totally make decisions over your alcohol.

Laurence Pevsner:

I mean, I drink red, I drink red.

Danny Crichton:

Okay, you drink red. Well, we'll see how that goes at the bar tonight. But that is our show for tonight. Thank you so much.

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