"Upstream" with Erik Torenberg

E80: Financial Plumbing with Patrick McKenzie and Erik Torenberg

8 snips
Sep 26, 2024
In this discussion, Patrick McKenzie, a financial expert, delves into the intricate world of banking and money laundering alongside host Erik Torenberg. They explore the three stages of money laundering—placement, layering, and integration—and how banks are often unintentionally ensnared in criminal activities while adhering to stringent regulations. The conversation also critiques the unintended consequences of these regulations on economic growth and financial inclusion, revealing a complex interplay between compliance and entrepreneurship.
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INSIGHT

Bureaucracy's Function and Failures

  • Large bureaucracies like the IRS and water departments demonstrate that complex systems can function.
  • However, they are prone to specific failure modes, as highlighted in "Seeing Like a State".
ANECDOTE

Big Tech's Competence and Limitations

  • Apple and Amazon's supply chains are incredibly efficient, surpassing even historical military logistics.
  • However, Big Tech's competence doesn't translate to all domains, as seen in Google's repeated messaging app failures.
INSIGHT

Big Tech's Incentive Problem

  • Big Tech struggles with employee incentives, particularly the tension between innovation and maintenance.
  • This explains the difficulty of sustaining new products, exemplified by Google's messaging app graveyard.
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