Which End Is Up?

June 13, 2025

Doug Leyendecker

Welcome to This Week’s Leyendecker View

Democracy and discord are natural.
– George Friedman

FAVORITE READ OF THE WEEK

The Collapse of the Knowledge System
Ted Gioia explains the step change we’re living in.

FAVORITE VIDEO OF THE WEEK

Engineering Earth
Filmmaker John D. Boswell explores geoengineering.

THINKING OUT LOUD

Which End Is Up?
The chaos of step change.

There are generally two types of change, incremental change and step change. Incremental change is additive and helpful to established infrastructure and institutions. Step change, on the other hand, can prove highly destructive to established infrastructure and institutions.

Today we are in the midst of step change. Lots of it.

The most powerful of all step change comes from technological innovations. Over the last handful of decades, we have gone from an analog to a digital world. The transition is a step change, and we’re feeling it across our economic and social ecosystems.

This step change is similar to what the country experienced during the period from the mid 1800s to early 1900s, when innovation in transportation, telecommunications and energy inspired massive economic, social and geopolitical change.

Today’s current step change is proving as disruptive, or perhaps even more. Our legacy economic, social and political ecosystems are in upheaval.

Some indicators we’re in a step change…

The 40-year period of globalization (1980-2020) is now in retreat. The related 40-year period of ever lower labor costs is also over.

The 40-year period of growing US government debt that subsidized globalization is over. US government debt is now untenable. Too much government debt likely means the 40-year period (1981-2021) of ever lower interest rates is over.

The 60-year period (1960-2020) of growing progressive ideology is now in retreat. The US can no longer pay the most attention to all the numerous special interest groups that feed from the government trough. We can no longer afford our government infrastructure.

We are moving from an intense focus on the individual to a focus on the need to create a sustainable future for the broader population. Narcissism is on its way out. Community and sacrifice for the greater good is on its way in.

Our recent 60-year period of ever pervasive progressive ideology is similar to what happened during the previous step change, when our agrarian society rapidly transitioned to an urban manufacturing society. Rural culture and its values declined. Urban culture, with different values, expanded.

That period ended with the roaring 20s, the 1929 stock market crash and the beginning of the Great Depression. It then produced two world wars. Should we expect something similar today? Just recently, it was reported that the number of armed conflicts right now is at its largest since WWII.

Our legacy educational institutions and infrastructure are in the midst of massive disruption. They are no longer monopolies of information and learning. Now that information has been set free and is ubiquitously available to everyone instantaneously via the internet, old education institutions will die and new ones will be created.

The canary in the coal mine for education looks to be the massive amount of debt that students incur to get a college education. Is it worth it? Another clue is the current debate over whether higher education is teaching students what to think rather than how to think.

Our legacy media is in the midst of step change. The previous step change gave us radio, movies, and ultimately television. In today’s step change, we have the internet and an explosion of content from anyone and everywhere.

Like all major changes, there are consequences. And the consequences from today’s media step change looks to be a growing mental health crisis. With so much information to process and so many information providers seeking to aggregate, influence, and addict an audience, we no longer know what the truth really is.

Will the urban world that resulted from our previous step change period continue to dominate, or is it about to be disrupted? Has urban living reached a point of diminishing returns?

Given how much work can now be done remotely, why won’t people seek out more pleasant places to live, places without strangling traffic and lower crime, and places that are more affordable?

Imagine the economic consequences of people leaving cities. Imagine the economic opportunity of population growth in lower-density locales.

The biggest tell we’re in step change? Our legacy institutions are fighting for dear life. We see it in higher education. We see it in government. We see it in media. Intuitively, they know they’re under existential threat and trying desperately to prove their value. They’re using the courts, bombast, fear-mongering and every political ally they can to fend off their demise.

This is to say nothing of what AI will do. Hold onto your hats. Step change continues.

To say we are living under intense ambiguity is an understatement. So much is in flux. The old trend lines are irrelevant. The new trend lines have yet to form. The natural consequence is uncertainty. It’s best to learn to tolerate it because it’s here to stay for a while.

This is a moment for courage, thoughtfulness and hope. And maybe a bit of sacrifice to bridge us to our next path. Maybe we should quit complaining and start doing, start considering how to position ourselves for this chaotic transition. Because there is a truism of every step change: Every forest fire creates fertile ground for the next forest.

THE RANDOMS

The stock market’s recent bout of “food poisoning” may have been the canary in the coal mine of future turmoil, a sign that the trend lines of the last 40-ish years are broken. Of course, team Trump quickly backtracked on tariffs.

Is this our current reality? The stock market is the economy.

How much of the chaos in Los Angeles, and for that matter the chaos surrounding the George Floyd protests, was incited by the media’s coverage of the events?

Get ready for what looks like a summer of protests. Will they turn violent? Are anti-American organizations financing them?

I have a house on the outskirts of Austin. I’m in Austin frequently, maybe too frequently. On a recent trip there, I got the impression that “normal is the new weird.”

How are we going to transition from a “Keynesian trap” economy to a more organic-growth economy without blowing something, maybe many things, up?

Since human beings are highly prone to mass psychosis, realize that AI is trained on our “truths.”

In his 1930 essay “Economic Possibilities for Our Grandchildren,” revered economist John Maynard Keynes foresaw a future where technological advancement could lead to widespread “technological unemployment.” He predicted that within a hundred years, the “economic problem”—the struggle for subsistence—could be solved through technological efficiency, which would dramatically reduce the need for human labor.

That was Keynes’ thinking almost 100 years ago.

Did Trump and Musk create their soap opera in order to get Congress to cut spending? Or are they just messing with legacy media?

Central banks are loading up on gold. Is there something they aren’t telling us?

ECONOMIC NEWS

Economy

Tariffs have not increased inflation—yet
But now oil prices are surging
Small business optimism increases a bit
Electricity costs increase past inflation
Electricity demand to grow by 25%, and fast

Labor

The secret to retaining top talent
AI company wants to eliminate white-collar jobs
New grads are screwed
Experienced hires are overrated

The Lone Star

Data center gold rush in Central Texas
Big shipyard looks on its way to Texas
Texas geothermal driller lands huge investment
100 new gas-fired power plants are also coming

BUSINESS

Finance