E80: Financial Plumbing with Patrick McKenzie and Erik Torenberg

8 snips

Sep 26, 2024

Guest

Erik Torenberg

Guest

Patrick McKenzie

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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