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This week we talk about arabica, robusta, and profit margins.We also discuss colonialism, coffee houses, and religious uppers.Recommended Book: On Writing and Worldbuilding by Timothy HicksonTranscriptLike many foods and beverages that contain body- or mind-altering substances, coffee was originally used, on scale at least, by people of faith, leveraging it as an aid for religious rituals. Sufis in what is today Yemen, back in the early 15th century, consumed it as a stimulant which allowed them to more thoroughly commit themselves to their worship, and it was being used by the Muslim faithful in Mecca around the same time.By the following century, it spread to the Levant, and from there it was funneled into larger trade routes and adopted by civilizations throughout the Mediterranean world, including the Ottomans, the Mamluks, groups in Italy and Northern Africa, and a few hundred years later, all the way over to India and the East Indies.Western Europeans got their hands on this beverage by the late 1600s, and it really took off in Germany and Holland, where coffee houses, which replicated an establishment type that was popularized across the Muslim world the previous century, started to pop up all over the place; folks would visit these hubs in lieu of alehouses, subbing in stimulants for depressants, and they were spaces in which it was appropriate for people across the social and economic strata to interact with each other, playing board games like chess and backgammon, and cross-pollinating their knowledge and beliefs.According to some scholars, this is part of why coffee houses were banned in many countries, including England, where they also became popular, because those up top, including but not limited to royalty, considered them to be hotbeds of reformatory thought, political instability, and potentially even revolution. Let the people hang out with each other and allow them to discuss whatever they like, and you end up with a bunch of potential enemies, and potential threats to the existing power structures.It’s also been claimed, and this of course would be difficult to definitively prove, though the timing does seem to line up, that the introduction of coffee to Europe is what led to the Enlightenment, the Age of Reason, and eventually, the Industrial Revolution. The theory being that swapping out alcohol, at least during the day, and creating these spaces in which ideas and understandings and experiences could be swapped, without as much concern about social strata as in other popular third places, spots beyond the home and work, that allowed all sorts of political ideas to flourish, it helped inventions become realized—in part because there were coffee houses that catered to investors, one of which eventually became the London Stock Exchange—but also because it helped people organize, and do so in a context in which they were hyper-alert and aware, and more likely to engage in serious conversation; which is a stark contrast to the sorts of conversations you might have when half- or fully-drunk at an alehouse, exclusively amongst a bunch of your social and economic peers.If it did play a role in those movements, coffee was almost certainly just one ingredient in a larger recipe; lots of variables were swirling in these areas that seem to have contributed to those cultural, technological, economic, and government shifts.The impact of such beverages on the human body and mind, and human society aside, though, coffee has become globally popular and thus, economically vital. And that’s what I’d like to talk about today; coffee’s role in the global economy, and recent numbers that show coffee prices are ballooning, and are expected to balloon still further, perhaps substantially, in the coming years.—For a long while, coffee was a bit of a novelty outside of the Muslim world, even in European locales that had decently well-established coffeehouses.That changed when the Dutch East India Company started importing the beans to the Netherlands in the early 17th century. By the mid-1600s they were bringing commercial-scale shipments of the stuff to Amsterdam, which led to the expansion of the beverage’s trade-range throughout Europe.The Dutch then started cultivating their own coffee crops in colonial territories, including Ceylon, which today is called Sri Lanka, and the island of Java. The British East India Company took a similar approach around the same time, and that eventually led to coffee bean cultivation in North America; though it didn’t do terribly well there, initially, as tea and alcoholic beverages were more popular with the locals. In the late 18th century, though, North Americans were boycotting British tea and that led to an uptick in coffee consumption thereabouts, though this paralleled a resurgence in tea-drinking back in Britain, in part because they weren’t shipping as much tea to their North American colonies, and in part because they conquered India, and were thus able to import a whole lot more tea from the thriving Indian tea industry.The Americas became more important to the burgeoning coffee trade in the mid-1700s after a French naval officer brought a coffee plant to Martinique, in the Caribbean, and that plant flourished, serving as the source of almost all of today’s arabica coffee beans, as it was soon spread to what is today Haiti, and by 1788, Haiti’s coffee plantations provided half the world’s coffee.It’s worth remembering that this whole industry, the portion of it run by the Europeans, at least, was built on the back of slaves. These Caribbean plantations, in particular, were famously abusive, and that abuse eventually resulted in the Haitian revolution of 1791, which five years later led to the territory’s independence.That said, coffee plantations elsewhere, like in Brazil and across other parts of South and Central America, continued to flourish throughout this period, colonialists basically popping into an area, conquering it, and then enslaving the locals, putting them to work on whatever plantations made the most sense for the local climate.Many of these conquered areas and their enslaved locals were eventually able to free themselves, though in some cases it took a long time—about a century, in Brazil’s case.Some plantations ended up being maintained even after the locals gained their freedom from their European conquerers, though. Brazil’s coffee industry, for instance, began with some small amount of cultivation in the 1720s, but really started to flourish after independence was won in 1822, and the new, non-colonialist government decided to start clearing large expanses of rainforest to make room for more, and more intensive plantations. By the early 1900s, Brazil was producing about 70% of the world’s coffee exports, with their neighbors—Colombia and Guatemala, in particular—making up most of the rest. Eurasian producers, formerly the only places where coffee was grown, remember, only made up about 5% of global exports by that time.The global market changed dramatically in the lead-up to WWII, as Europe was a primary consumer of these beans, and about 40% of the market disappeared, basically overnight, because the continent was spending all their resources on other things; mostly war-related things.An agreement between South and Central American coffee producing countries and the US helped shore-up production during this period, and those agreements allowed other Latin American nations to develop their own production infrastructure, as well, giving Brazil more hemispheric competition.And in the wake of WWII, when colonies were gaining their independence left and right, Ivory Coast and Ethiopia also became major players in this space. Some burgeoning Southeast Asian countries, most especially Vietnam, entered the global coffee market in the post-war years, and as of the 2020s, Brazil is still the top producer, followed by Vietnam, Indonesia, Colombia, and Ethiopia—though a few newer entrants, like India, are also gaining market share pretty quickly.As of 2023, the global coffee market has a value of around $224 billion; that figure can vary quite a lot based on who’s numbers you use, but it’s in the hundreds of billions range, whether you’re looking just at beans, or including the ready-to-drink market, as well, and the growth rate numbers are fairly consistent, even if what’s measured and the value placed on it differs depending on the stats aggregator you use.Some estimates suggest the market will grow to around $324 billion, an increase of around $100 billion, by 2030, which would give the coffee industry a compound annual growth rate that’s larger than that of the total global caffeinated beverage market; and as of 2023, coffee accounts for something like 87% of the global caffeinated beverage market, so it’s already the dominant player in this space, and is currently, at least, expected to become even more dominant by 2030.There’s concern within this industry, however, that a collection of variables might disrupt that positive-seeming trajectory; which wouldn’t be great for the big corporations that sell a lot of these beans, but would also be really bad, beyond shareholder value, for the estimated 25 million people, globally, who produce the beans and thus rely on the industry to feed their families, and the 100-110 million more who process, distribute, and import coffee products, and who thus rely on a stable market for their paychecks.Of those producers, an estimated 12.5 million work on smaller farms of 50 acres or less, and 60% of the world’s coffee is made by people working on such smallholdings. About 44% of those people live below the World Bank’s poverty metric; so it’s already a fairly precarious economic situation for many of the people at the base-level of the production system, and any disruptions to what’s going on at any level of the coffee industry could ripple across that system pretty quickly; disrupting a lot of markets and local economies, alongside the human suffering such disruptions could cause.This is why recent upsets to the climate that have messed with coffee crops are causing so much anxiety. Rising average temperatures, bizarre cold snaps, droughts, heavy and unseasonable rainfalls—in some cases all of these things, one after another—combined with outbreaks of plant diseases like coffee rust, have been putting a lot of pressure on this industry, including in Brazil and Vietnam, the world’s two largest producers, as of the mid-2020s.In the past year alone, because of these and other externalities, the price of standard-model coffee beans has more than doubled, and the specialty stuff has seen prices grow even more than that.Higher prices can sometimes be a positive for those who make the now-more-expensive goods, if they’re able to charge more but keep their expenses stable.In this case, though, the cost of doing business is going up, because coffee makers have to spend more on protecting their crops from diseases, losing crops because of those climate issues, and because of disruptions to global shipping channels. That means profit margins have remained fairly consistent rather than going up: higher cost to make, higher prices for consumers, about the same amount of money being made by those who work in this industry and that own the brands that put coffee goods on shelves.The issue, though, is that the cost of operation is still going up, and a lot of smallholders in particular, which again, produce about 60% of all the coffee made, worldwide, are having trouble staying solvent. Their costs of operation are still going up, and it’s not a guarantee that consumers will be willing to continue spending more and more and more money on what’s basically a commodity product; there are a lot of caffeinated beverages, and a lot of other types of beverage they could buy instead, if coffee becomes too pricy.And at this point, in the US, for instance, the retail price of ground roast coffee has surpassed an average of $7 per pound, up 15% in the past year. Everyone’s expecting that to keep climbing, and at some point these price increases will lose the industry customers, which in turn could create a cascading effect that kills off some of these smaller producers, which then raises prices even more, and that could create a spiral that’s difficult to stop or even slow.Already, this increase in prices, even for the traditionally cheaper and less desirable robusta coffee bean, has led some producers to leave coffee behind and shift to more consistently profitable goods; many plantations in Vietnam, for instance, have converted some of their facilities over to durian fruit, instead of robusta, and that’s limited the supply of robusta, raising the prices of that bean, which in turn is causing some producers of robusta to shift to arabica, which is typically more expensive, and that’s meant more coffee on the market is of the more expensive variety, adding to those existing price increases.The futures markets on which coffee beans are traded are also being upended by these pricing issues, resulting in margin calls on increasingly unprofitable trades that, in short, have necessitated that more coffee traders front money for their bets instead of just relying on short positions that have functioned something like insurance paid with credit based on further earnings, and this has put many of them out of business—and that, you guessed it, has also resulted in higher prices, and more margin calls, which could put even more of them out of business in the coming years.There are ongoing efforts to reorganize how the farms at the base on this industry are set up, both in terms of how they produce their beans, and in terms of who owns what, and who profits, how. This model typically costs more to run, and results in less coffee production: in some cases 25% less. But it also results in more savings because trees last up to twice as long, the folks who work the farms are much better compensated, and less likely to suffer serious negative health impacts from their labor, and the resultant coffee is of a much higher quality; kind of a win win win situation for everyone, though again, it’s less efficient, so up till now the model hasn’t really worked beyond some limited implementations, mostly in Central America.That could change, though, as these larger disruptions in the market could also make room for this type of segue, and indeed, there has apparently been more interest in it, because if the beans are going to cost more, anyway, and the current way of doing things doesn’t seem to work consistently anymore, and might even collapse over the next decade if something doesn’t change, it may make sense, even to the soulless accounting books of major global conglomerates, to reset the industry so that it’s more resilient, and so that the people holding the whole sprawling industry up with their labor are less likely to disappear some day, due to more favorable conditions offered by other markets, or because they’re simply worked to death under the auspices of an uncaring, fairly brutal economic and climatic reality.Show Noteshttps://www.nytimes.com/2025/02/22/business/coffee-prices-climate-change.htmlhttps://web.archive.org/web/20100905180219/https://www.web-books.com/Classics/ON/B0/B701/12MB701.htmlhttps://www.jstor.org/stable/1246099?origin=crossrefhttps://www.theguardian.com/australia-news/2025/jan/07/coffee-prices-australia-going-up-cafe-flat-white-costhttps://www.bbc.com/news/articles/c5y37dvlr70ohttps://www.nytimes.com/2024/12/28/business/coffee-prices-climate-change.htmlhttps://markets.businessinsider.com/news/commodities/coffee-prices-food-inflation-climate-change-eggs-bank-of-america-2025-2https://www.statista.com/statistics/675807/average-prices-arabica-and-robusta-coffee-worldwide/https://www.ft.com/content/9934a851-c673-4c16-86eb-86e30bbbaef3https://www.cnn.com/2024/08/01/business/your-coffees-about-to-get-more-expensive-heres-why/index.htmlhttps://www.marketresearchfuture.com/reports/caffeinated-beverage-market-38053https://www.grandviewresearch.com/industry-analysis/caffeinated-beverage-markethttps://en.wikipedia.org/wiki/Coffeehttps://en.wikipedia.org/wiki/English_coffeehouses_in_the_17th_and_18th_centurieshttps://en.wikipedia.org/wiki/Coffeehousehttps://en.wikipedia.org/wiki/History_of_coffeehttps://sites.udel.edu/britlitwiki/the-coffeehouse-culture/https://www.openculture.com/2021/08/how-caffeine-fueled-the-enlightenment-industrial-revolution-the-modern-world.html This is a public episode. 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This week we talk about H5N1, fowl plague, and viral reservoirs.We also discuss the CDC, raw milk, and politics.Recommended Book: Nexus by Yuval Noah HarariTranscriptIn late-January of 2025, staff at the US Centers for Disease Control, the CDC, were told to stop working with the World Health Organization, and data, and some entire pages containing such data, and analysis of it, were removed from the CDC’s web presence—the collection of sites it maintains to provide information, resources, and raw research numbers and findings from all sorts of studies related to its remit.And that remit is to help the US public stay healthy. It provides services and guidelines and funding for research and programs that are meant to, among other things, prevent injury, help folks with disabilities, and as much as possible, at least, temper the impacts of disease spread.Its success in this regard has been mixed, historically, in part because these are big, complex, multifaceted issues, and with current technology and existing systems it’s arguably impossible to completely control the spread of disease and prevent all injury. But the CDC has also generally been a moderating force in this space, not always getting things right, itself, but providing the resources, monetary and otherwise, to entities that go on to do big, generally positive things across this range of interconnected fields.Many of the pages that were taken down from the CDC’s web presence in late-January popped back up within a few weeks, and now, according to experts from around the world, these pages have been altered—some mostly the same as they were, but others missing a whole lot of data, while still others now contain misinformation and/or polemic. A lot of that misinformation and political talking points are related to things the recently re-ascendent Trump administration has made a cornerstone of its ideological platform, including anti-trans policies and things that cast skepticism on vaccines, abortion, birth control, and even information related to sexually transmitted infections.Scientists doing research that is in any way connected to concepts like diversity, equality, and inclusivity—so-called DEI issues—have been forced to halt these studies, and research that even includes now-banned words in different contexts—words like gender, LGBT, and nonbinary—have likewise been halted, or in some cases banned altogether. Data sets and existing research that happen to include any reference to this collection of terms have likewise been pulled from the government’s publicly accessible archives; so some stuff actually connected to DEI issues, but initial looks into what’s been halted and cancelled shows that things like cancer research and other, completely non-political stuff, too, has been stopped because somewhere in the researchers’ paperwork was a word that is now not allowed by the new administration.All of which is part of a much bigger story, one that I won’t get into right now, as it’s still evolving, and is very much it’s own thing; that of the purge of government agencies that’s happening in the US right now, at the apparent behest of the president, and under the management of the world’s wealthiest person, Elon Musk, via his task force, the Department of Government Efficiency, or DOGE.This process and the policies underpinning it are facing a lot of legal pushback, even from other Republicans, in at least a few cases. But it’s also a story that’s evolving by the day, if not the minute, and the long-term ramifications are still up in the air; some are calling it the first move in an autogolpe, a coup from within, while others are calling it a hamfisted attempt to seem to be doing things, to be reducing expenses in the government, but in such a way that none of the actions will be particularly effective, and most will be countered by judicial decisions, once they catch up with the blitzkrieg-like speed of these potentially illegal actions.There’s been some speculation that this will end up being more of an albatross around the neck of the administration, than whatever it is they actually hope to accomplish with it—though of course there are just as many potentially valid concerns that, again, this is a grab for power, meant to centralize authority within the executive, with the president, and that, in turn could make it difficult for anyone but a Republican, and anyone but a staunch ally of Trump and his people, to ever win the White House again, at least for the foreseeable future.But right now, as all those balls are in the air and we’re waiting to see what the outcome of that flurry of activity will actually be, practically, I’d like to focus on one particular aspect of this culling of the CDC’s records, publicly available information, and staff.What I’d like to talk about today is bird flu, and what we think we know about its presence in the US right now, and how that presence is being felt by everyday people, already.—What we colloquially call bird flu, or sometimes avian flu, or the avian influenza, if you’re fancy, is actually a subtype of influenza called Influenza A virus subtype H5N1, or just H5N1.There have been many subtypes of bird flu over the generations, some of which have disappeared from the record (as far as we can tell, at least), while others are still tracked, but in animal populations in locations that make them low-risk, in terms of spreading beyond their host species.We’ve been studying various types of bird flu since at least the late-1800s, when researchers in Italy started looking into a disease colloquially called “fowl plague,” because it was afflicting chicken and other poultry flocks. This wasn’t the first time something that seems like it was probably this disease afflicted flocks and was recorded as having done so, but it was the first time such a plague was differentiated from bacterial diseases that were also prevalent in such poultry communities, and thus they could say it was something distinct from, for instance, fowl cholera, which was also pretty common back then.In the 1950s, it was confirmed that this avian flu was similar to flus that afflict humans, and in the 1970s, researchers figured out that the flus they were tracking in bird populations were diverse, in the sense that there were many subtypes, not just one universal disease.Today, we know that this type of Influenza A virus, of which H5N1 is just one example, are super common in wild waterfowl, and they’ve achieved this commonality, in part, by living in their respiratory and gastrointestinal systems without negatively effecting their host. So the birds can fly around and eat and peck at things without even getting a case of the bird sniffles, which means they’re less likely to isolate from their kin, which means they’re more likely to spread it to all of their friends.Waterfowl also tend to travel great distances, just as a matter of course, migrating across continents, in some cases, but in others simply flitting from lake to pond to puddle, looking for food.Domesticated birds, like chicken and ducks that are kept for their eggs or meat, tend to catch bird flu either by socializing with their wild kin, or by coming into contact with their feces, or surfaces that have been contaminated by their feces.In this way, traveling flocks of ducks and geese and seagulls, which maybe set down to get a drink or some food at a source of water in a bird meat facility, could infect a chicken directly, but just by flying overhead and pooping, they can do the same, as chickens will tend to peck around at the ground, and if that poop is somewhere nearby, boom, chicken infected, and then, in relatively short order, the whole coop is also infected.There are vaccines that can protect chickens and other domesticated birds from avian flu, but because of how widespread H5N1 in particular is, it mutates rapidly, so these vaccines are not a silver bullet. On top of that, buying and administrating them costs poultry companies more money, and because they might administer a vaccine that hasn’t kept up with the mutations of the disease, that could end up being a sunk cost; so the money question sometimes keeps poultry providers from vaccinating their flocks, but even those who do apply this layer of protection don’t always benefit from the investment as much as they would like.And birds that are thus infected spread the disease rapidly, but also tend to die in large numbers. The relatively chilled-out symptoms experienced by water fowl doesn’t always translate to other types of birds, so chickens will sometimes conk out pretty quickly, and on top of that, when bird flu gets into a poultry population and mutates within them, the new mutation of the disease might get out into the water fowl population, and that can then cause anywhere from mild flu symptoms to reliable death in those ducks and geese and such. So the version they have might be mundane, they give that mundane version to chickens, where it mutates into something else, and that new bird flu variant then goes back into the water fowl and, no longer mundane, kills them all.So part of the problem here, as is the case with any virulent, quick-spreading, treatment-resistant pathogen with large wild reservoirs where it can survive even when the populations we’re tracking are cured or culled, is that this thing evolves just really quickly. And that means anything we do, vaccines, killing infected populations or potentially infected populations, dividing flocks into smaller, easier to manage and segment groups, generally doesn’t keep up with the emergence of new versions of the disease.This can, in turn, result in new versions that spread even quicker, that are harder to detect, or which simply kill a lot faster.It can also lead to mutations that spread more readily to and within other species, including mammals.And that’s what seems to be happening in meat and dairy cattle, at the moment, in addition to some of the humans who work closely with birds and with cows.There have been reports over the past couple of years of folks in the US coming into close contact with infected birds or cows contracting bird flu, or testing positive for bird flu antibodies, which means the disease hit them, but they either managed to fend it off or had it for a while, and then their immune system took care of it—even if they didn’t have symptoms.Such infections, those we know about for certain, anyway, as opposed to having hints of suggestions of them, still seem to be relatively small in number. A recent study, which the CDC was eventually able to publish, after those pulled pages and hidden data sets started to come back online, indicates that of 150 cow veterinarians tested for evidence of bird flu infection, only three had such evidence.That said, two of those three did not have any known exposure to bird flu-infected animals, and one didn’t even practice in a state with any known infections. So this is a mixed outcome; good, in a sense, that infection evidence in humans who come into contact with potentially infected animals isn’t more widespread, but alarming in the sense that those who did have such infection indicators were mostly doing work that wouldn’t seem to have put them at risk of infection, based on what our data tell us, and yet, they were put at such risk. Which suggests our sense of how widespread this thing has gotten is probably way, way off at this point; the official data on where bird flu is, and even what animals it’s infecting, is perhaps uselessly out of date in the US.So at this point, the official CDC data say there have been 68 cases of bird flu in humans in the US since 2024, and one of those infections has resulted in death.41 of those infections were the result of exposure to dairy cattle, 23 were from exposure to poultry farms or poultry meat production facilities, 1 was from another unspecified animal contact, and 3 were from unknown sources.The major concern, here, is that these numbers suggest bird flu isn’t having a hard time moving from birds to other mammals to humans, at this point, so that aforementioned 68 cases in humans since 2024 could be a vast undercount; we might already be in the early days of a new pandemic, and we don’t realize it because we simply don’t have the data.I think it’s worth noting, though, that the biggest bird-flu related threat, the biggest one we have data for, anyway, globally, is people who are coming into contact with infected animals, or in some cases consuming their meat or milk.Most of the officially documented cases of bird flu in humans, since the early 2000s, have been in Southeast Asia, and there have been around 950 humans infections and just over 460 deaths caused by various types of bird flu since 2003, according to World Health Organization numbers; most of those deaths were in in the early 2000s.So not a ton of either infections or death over that span of time, but that also means this disease has a fatality rate of something like 50% in humans; around half the people who contract it die. Which is not great. And that’s part of why the concern about this type of flu may to seem a little out of proportion to the recent infection numbers—if it mutates, evolving a version of itself that is transmissible between humans so that we see transmission similar to what we see in bird flocks, that would be very, very bad.At the moment, though, even if something like that never manifests, poultry and dairy industries could suffer significant losses as a consequence of this animal-world pandemic, and to some degree, they already have. Especially those in the US.This is spreading in flocks globally, to a limited degree, but US poultry, beef, and dairy industries are being absolutely clobbered by the dual impact of infections that are necessitating additional protections against infection, and the increasing number of mass-cullings—killing entire flocks, because one of their number has been infected—that have been necessary in recent years. This has put a lot of such companies out of business, and the amount of stock, of animals, that have had to be killed as a precautionary measure, to keep one or a few infections from spreading more widely, have been staggering.Egg prices have been a semi-reliable indicator of inflation rates in the US for a long time, but the investments required and cullings committed have ballooned egg prices in recent months, hitting record highs and stoking outcries both within the industry, and amongst consumers who have seen average egg prices more than double between late-2023 and January 2025; and that’s when eggs have been reliably available on supermarket shelves, which hasn’t always been the case during this period.On top of that, there are heightening concerns about bird flu in the egg, meat, and milk supply; US government agencies have said that cooking meat appropriately, to the recommended temperatures, kills pathogens, including bird flu, and the pasteurization of milk, which basically means rapidly heating it, briefly, to kill germs, has been shown to kill the bird flu virus. But a purity- or naturalism-based movement, often closely tied with the anti-vaccine movement, has seen a surge in popularity in the US, and many people who subscribe to that ideological have also become supporters of consuming raw milk, which isn’t pasteurized, and thus this virus, and other pathogens, can survive in it, potentially becoming a new vector of infection for humans.So there’s a lot going on in the US government right now that’s making tracking such things difficult, and trusting the information even more so, in some cases. And that could remain the case, and could become even more muddled, based on the stated beliefs of some of the people who are being put in charge of these agencies, the studies they conduct, the things they track, and the information they divulge.But at the base level, right now at least, it looks like bird flu has become a persistent reality within the US poultry and cattle industries, that most humans probably don’t have a lot to worry about, yet, but that this could change rapidly, if those industries aren’t able to get things back under control, as that would provide more viral reservoirs for this disease in which it can mutate, and reservoirs that are closer to large populations of humans than the wild waterfowl flocks that otherwise serve as the largest stockpile of these viral colonies.Show Noteshttps://www.nytimes.com/2025/01/23/nyregion/long-island-duck-farm-bird-flu.html?unlocked_article_code=1.rk4.oY1r.MEdP-NpwG4owhttps://doc.woah.org/dyn/portal/digidoc.xhtml?statelessToken=USHi9N-71EDqawTHVX0wYrVCjSlZ8B8vx8qFYu3Ngcw=&actionMethod=dyn%2Fportal%2Fdigidoc.xhtml%3AdownloadAttachment.openStatelesshttps://en.wikipedia.org/wiki/Avian_influenzahttps://en.wikipedia.org/wiki/Influenza_A_virus_subtype_H5N1https://www.cdc.gov/mmwr/volumes/74/wr/mm7404a2.htmhttps://www.cdc.gov/bird-flu/situation-summary/index.htmlhttps://www.npr.org/sections/shots-health-news/2025/02/13/nx-s1-5296672/cdc-bird-flu-study-mmwr-veterinarianshttps://arstechnica.com/health/2025/02/h5n1-testing-in-cow-veterinarians-suggests-bird-flu-is-spreading-silently/https://cdn.who.int/media/docs/default-source/wpro---documents/emergency/surveillance/avian-influenza/ai_20250131.pdfhttps://www.washingtonpost.com/business/2025/02/15/bird-flu-influenza-eggs/https://archive.ph/QDcZihttps://www.washingtonpost.com/dc-md-va/2025/02/15/return-to-office-mandate-trump-desks/https://arstechnica.com/health/2025/02/the-country-is-less-safe-cdc-disease-detective-program-gutted/https://arstechnica.com/health/2025/02/a-sicker-america-senate-confirms-robert-f-kennedy-jr-as-health-secretary/https://www.npr.org/sections/shots-health-news/2025/02/06/nx-s1-5288113/cdc-website-health-data-trumphttps://www.vox.com/future-perfect/399319/trump-cdc-health-data-removed-obesity-suicidehttps://en.wikipedia.org/wiki/Centers_for_Disease_Control_and_Prevention This is a public episode. 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The podcast tackles critical topics like planetary defense against asteroids and highlights the potential collision risk posed by asteroid 2024 YR4. It discusses the DART mission, which successfully tested asteroid deflection, and reflects on past events like the dinosaur extinction caused by an asteroid impact. The conversation also delves into the origins of the Moon, theorizing how a Mars-sized object named Theia may have collided with Earth. Lastly, an intriguing exploration of a sci-fi novel featuring AI and black magic adds a creative twist to the discussion.

Dive into the tumultuous world of U.S. protectionism! The discussion highlights tax hikes and tariff strategies aimed at both allies and adversaries. Delve into the madman theory of negotiation and its surprising implications. The impact of these protective measures on imports from Canada, Mexico, and China uncovers both the intended benefits for domestic industries and the unintended costs for consumers. Explore how these policies are shaping the economic landscape and affecting American households amidst ongoing global competition.

This week we talk about OpenAI, the Stargate Project, and Meta.We also discuss o1, AGI, and efficiency.Recommended Book: The Shortest History of Economics by Andrew LeighTranscriptOne of the bigger news items these past few weeks, in terms of the numbers involved, at least, was an announcement by US tech company OpenAI that it will be starting a new company called the Stargate Project, which will boast a total $500 billion-worth of investment, the first $100 billion of which will be deployed immediately.All that money will be plowed into artificial intelligence infrastructure, especially large-scale computing clusters of the kind required to operate AI systems like ChatGPT, and the funds are coming from OpenAI itself, alongside SoftBank, Oracle, and MGX, with Arm, Microsoft, and NVIDIA also involved as technology partners.It’s a big, beefy enterprise, in other words, and the fact that this has been in the works since 2022, it’s official announcement seemingly held back so that newly returned US President Trump could announce it as part of his administration’s focus on American infrastructure and AI dominance, didn’t dim the glow of the now-formal announcement of what looks to be a truly audacious bet on this collection of technologies, doubts about the players involved having the money they’ve promised ready, notwithstanding.That said, this is far from the only big, billions and tens of billions-scale wager in this space right now.Last year, Microsoft announced a $30 billion infrastructure fund, in collaboration with BlackRock, and earlier in January of 2025, Google’s CEO said that his company would spend about $80 billion on the same, separate from their commitment to Stargate.Meta’s CEO Mark Zuckerberg recently divulged that the company would spend somewhere between $60-65 billion on capital expenditures, mostly on AI, in 2025—that’s up about 70% from 2024 spending.And last December, xAI CEO Elon Musk announced that his company had just raised a fresh $6 billion to build-out more compute infrastructure; and his role at the head of that company is assumed to be part of why he trash-talked the aforementioned Stargate effort, though there’s also a long-simmering animus between him and OpenAI CEO Sam Altman, and the fact that everyone seems to be trying to get in good with Trump—which is probably part of why many of these announcements are happening right now: Trump is in the position to king-make or cripple their respective efforts, so whomever can get in good with him, or best with him, might have an advantage in what’s become a very expensive knife-fight in this most rapidly burgeoning of tech investment loci.There’s a reason there’s so much money flowing to this space, announcements aside, right now, too: the chatbots that’ve emerged from the GPT, LLM era of AI systems are impressive and useful for many things, and AI powered bots could even replace other sorts of user interfaces, like search engines and apps, with time.But there are also some more out-there efforts that are beginning to bear fruit.AI is helping Google’s DeepMind team discover new materials at an astonishing rate—including both the discovery and the testing of their properties, stage.AI systems are also being used to accelerate drug discovery and trial design, and a company (backed by OpenAI’s Altman) is trying to extend human life by a decade using exactly this process.Meta has a new tool that enables real-time speech and text translation between up to (depending on the type of translation being done) 101 different languages, and we’re even seeing AI systems meant to detect and track small, otherwise overlooked infrastructure issues, like potholes, at a local level.And to be clear, this is far from a US government and US-based tech company effort: government agencies, globally, are scrambling to figure out how to regulate AI in such a way that harms are limited but research, investment, and innovation isn’t hampered, and entities all over the place are plowing vast wealth into these projects and their related infrastructure; India’s Reliance Group recently announced it will build what could become the world’s biggest data center, planned to go into operation within two years—a project with an estimated price tag of somewhere between $20-30 billion. And that, all by itself, would more than triple the country’s data center footprint.So this scramble is big but also global, and it’s partly motivated by the gold rush-like desire to be first to something like artificial general intelligence, or AGI, which would theoretically be capable of doing basically anything a human can do, and possibly better.That could, depending on the cost of developing and running such a system, put a lot of humans out of work, scrambling the world and its economy it all sorts of ways, and causing untold disruptions and maybe even havoc. That chaos could be very good for business, however, for whomever is able to sell this new commodity of labor to everyone else, replacing most or all of their employees with digital versions of the same—each one cheaper than a comparable human would be to perform the same work.What I’d like to talk about today, though, is a challenge to the currently dominant theory of operation in this industry, and why a new family of AI models is sending many of the tech world’s biggest players into a panic.—A lot of the news coming out of the AI world, at the moment, is focused on what are called agents, or agentic AI.An AI agent is a system that can operate with agency: it can do things on its own. So you could have one of these systems, something you might engage with like a chatbot, but one capable of taking complex instructions, and you could tell it to find the best e-bike for your use case, and it would then take your info, your context, your needs into consideration, do a bunch of research, and maybe even buy and set up the delivery of the bike for you, with limited check-ins required on your part.A truly agentic AI would operate as sort of a personal assistant, capable of doing anything a human personal assistant would be able to do—sans the physical body, of course—though that could come later.This is generally seen as a step on the path toward AGI, and perhaps even AI superintelligence, which would be AGI that’s massively smarter and better at everything than any human, all of which also moves these things from the realm of “tool to be wielded by humans”, toward something more like a robot that can do all the things it’s supposed to do, without a human present; a different category of product and service.This type of AI, with this level of capability, is generally considered to be really expensive to make—to train, in the industry parlance—and to use, because of how much computing power is required to run the code required to leverage these sorts of smarts.In 2020, ChatGPT-3 cost somewhere between $2-4 million to train. Its successor, ChatGPT-4, which was deployed in 2023 cost more like $75-100 million.That’s a lot more money. The model is a lot more powerful, granted, but the scaling laws that have seemed to be at play in this space, the increase in cost between generations of AI, have suggested that getting another capability leap comparable to what we saw between ChatGPT-3 and 4 would cost something like a billion dollars, and even that might give us a jump, but not the same staggering growth in performance that we saw between those generations.The are arguments to be made that the size and type of dataset matter, here, and that the culling of said datasets, and how the models are tuned to use the data and respond to things are also vital, perhaps as much or more so than the initial training.Companies like OpenAI have also figured out all sorts of ways to wring more performance out of less training and compute, including things like allowing the AI to reference other sources—basically doing a web search or checking wikipedia and similar references, in addition to knowledge that already exists in its training dataset—or allowing them to “think” longer, giving them more time to work through a problem or task, which tends to lead to better results, even with weaker—in terms of training and compute power—systems.Ultimately, though, most of these companies seem to be assuming that more money churned into more infrastructure and compute capability will be necessary, to make these things better at doing science and solving global problems, at maybe running military campaigns-scale issues, but also at replacing humans as employees—creating more agentic, ultimately, they hope, AGI-level systems.So that’s a big part of why there’s so much money sloshing around in the AI world right now: all these companies want to build the biggest, baddest model, they would love to develop AGI and put everyone out of work, and they assume that more money will equal more potency, so if they don’t start building now, they risk being left behind in a couple of years when all their competitor’s snazzy new assets are available and powering their AI systems—which could allow their competitors to get there first, and there’s a general assumption that it’s important to be first or close to first on this, as truly AGI-level, or beyond AI could theoretically allow them to refine their own systems faster, which could secure them a permanent lead over their opposition, moving forward.Though the US is generally considered to be in the prime position in that particular race, so far, China has been investing a lot in this space, as well, and many of their investments have been similar to those of their Western competitors; dropping lots of money on the issue, building big infrastructure, and so on.They’ve been hindered quite a lot by Western, especially US, sanctions, though, and that’s made it more difficult, not impossible, but more time-consuming and expensive for them, to get the highest-end chips optimized for AI systems, like those made by NVIDIA.This has forced them to take some different approaches to their international peers, and while many of those approaches still involve huge price tags and build-outs, some of them have instead focused on a less-celebrated aspect of the industry: that of smaller models that are a lot more efficient, achieving gains that are out of proportion to their training and operating costs.Case in point are the new DeepSeek R1 models, which are a collection of AI models that were cheap to make, released free for public use and editing, and which seem to beat OpenAI’s o1 reasoning models—which are very much not free, and which were a lot more expensive to develop—on some of the most widely used performance benchmarks.These models apparently cost something like 3-5% what OpenAI spent on its o1 model, a mere $5.6 million, and again, they’re free to use, but also open source, so anyone who wants to build their own business or new AI atop them can do so; and their API costs are more than 90% lower than o1’s, so it’s also a lot cheaper to use these models for development purposes than OpenAI’s options.This isn’t the first time a Chinese company has taken a look at what folks are doing in the west and then massively undercut their efforts by amplifying the efficiency many fold. Also, again, there’s a constraint on Chinese companies’ ability to get the latest and greatest AI hardware, which incentivizes this path of development, and they also have a super competitive tech industry in China, which tends to force a lot of their sub-industries, like batteries and solar panels, to iterate rapidly and push costs as low as functionally possible.This family of models was made as kind of a side project by someone who’s been competing within that somewhat brutal evolutionary context, and the rest of the world, by comparison, just hasn’t had the same forcing functions influencing its development path—so this level of efficiency with this level of performance has been, up to this point, unheard of. And as a result, these DeepSeek models have sent the US and other western tech industries into a tizzy.And it makes sense that these people would be panicking: they have spent, and are intending to continuing spending heavily on next-gen AI infrastructure, and this type of model, trained for basically nothing, demonstrating this level of performance? It calls all those investments into question, even to the point that some commentators—without evidence, so there’s no reason to believe this is the case—have wondered out loud if this might be some kind of psyop by China to kill the US’s AI industry, basically making it look like a bad investment, if these kinds of results can be achieved so inexpensively elsewhere.Again, that’s almost certainly not what’s happening here, but these models have reportedly landed like a live hand grenade in the offices of the US AI industry, with folks in big tech companies frantically trying to figure out how DeepSeek does what it does, and then surreptitiously copying whatever they can to try to get ahead of this, build their own version of the same and maybe work those findings into their planned investments.Meta in particular has apparently been on edge about this, as they’ve tried to own the free, open AI model space with their Llama family of AI models; which have been generally well received, but apparently DeepSeek’s earlier model, v3, was already messing with their heads, surpassing what they were able to do with llama, and this new family, the R1 family, has them worried they won’t be able to hold onto that position, and might not even be able to compete, despite their tens of billions of dollars worth of investment.What’s more, something this effective and efficient can be run by a lot of companies that would otherwise have had to rely on entities like OpenAI and Meta, which have the computing infrastructure—all those big buildings they’re constructing at a frantic rate and high cost—to handle the larger models.Non-AI companies that want to use these systems, though, could theoretically just buy their own, smaller setup and run their own AI, in-house, which would alleviate some security concerns related having all that stuff processed off-site, but it would also almost certainly be cheaper over the long-term, compared to just paying someone like Google or OpenAI for their services, forever.All of this has resulted in a fair bit of volatility in the US stock market, which has been heavily reliant on AI-oriented tech stocks for growth over the past year, with NVIDIA in particular taking a hit, due to the possibility that heavyweight chips might not be vital to creating high-end AI systems.There are downsides to DeepSeek, of course, perhaps most obviously that this model, having come from China, is laden with censorship about exactly the sorts of things you would expect: Tianammen Square, China’s government and it’s many well-documented abuses, and so on. There could be more issues, too, that the folks who look into such things will discover after spending more time with this family of AI, though thus far, the response has generally been very positive, even with those caveats.Either way, this challenges the assumption that the US or any other country can stifle another nation’s, or group’s, AI ambitions with hardware sanctions.It also suggests that, if this general approach could be replicated, we may see a lot more models that are cheap and easy to run, but which are also effective enough for a lot of those next-step, higher-end utilities. And that would allow AI to spread a lot more quickly, more people being able to wield more powerful tools, while also potentially doing away with many of the moats—the defendable, unique value propositions—these larger tech companies assumed they would have by building and controlling the pricy infrastructure they assumed would be necessary to spin-up AI systems of that calibre.Show Noteshttps://www.microsoft.com/en-us/research/story/ai-meets-materials-discovery/https://semianalysis.com/2025/01/23/openai-stargate-joint-venture-demystified/https://openai.com/index/announcing-the-stargate-project/https://techcrunch.com/2025/01/24/stargate-will-use-solar-and-batteries-to-power-100b-ai-venture/https://www.ft.com/content/4541c07b-f5d8-40bd-b83c-12c0fd662bd9https://www.politico.com/news/2025/01/23/trump-staff-musk-conflict-00200311https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-funding.htmlhttps://www.cnbc.com/2025/01/22/trump-had-phone-call-with-openais-sam-altman-last-week.htmlhttps://www.whitehouse.gov/presidential-actions/2025/01/removing-barriers-to-american-leadership-in-artificial-intelligence/https://apnews.com/article/trump-ai-artificial-intelligence-executive-order-eef1e5b9bec861eaf9b36217d547929chttps://restofworld.org/2025/global-ai-regulation-big-tech/https://www.wsj.com/tech/ai/meta-spending-ai-facebook-data-centers-9452a88fhttps://www.reuters.com/technology/meta-invest-up-65-bln-capital-expenditure-this-year-2025-01-24/https://www.bloomberg.com/news/articles/2025-01-23/billionaire-mukesh-ambani-plans-world-s-biggest-data-center-in-india-s-gujarat?embedded-checkout=truehttps://www.bloomberg.com/news/articles/2025-01-24/apple-enlists-company-veteran-kim-vorrath-to-help-fix-ai-and-siri?embedded-checkout=truehttps://www.ft.com/content/25a473ea-9f87-474a-8729-bc5287df853ahttps://spectrum.ieee.org/machine-translationhttps://techcrunch.com/2025/01/24/elevenlabs-has-raised-a-new-round-at-3b-valuation-led-by-iconiq-growth-sources-say/https://www.bloomberg.com/news/articles/2025-01-24/vc-lightspeed-bets-big-on-ai-megadeals-backing-anthropic-xai-mistralhttps://www.ft.com/content/7dcd4095-717e-49f8-8d12-6c8673eb73d7https://www.nytimes.com/2025/01/23/technology/ai-test-humanitys-last-exam.htmlhttps://every.to/chain-of-thought/we-tried-openai-s-new-agent-here-s-what-we-foundhttps://www.platformer.news/openai-operator-ai-agent-hands-on/https://techcrunch.com/2025/01/23/openai-launches-operator-an-ai-agent-that-performs-tasks-autonomously/https://www.axios.com/2025/01/19/ai-superagent-openai-metahttps://blog.google/technology/google-deepmind/google-gemini-ai-update-december-2024/https://arstechnica.com/ai/2025/01/china-is-catching-up-with-americas-best-reasoning-ai-models/https://www.macrumors.com/2025/01/27/deepseek-ai-app-top-app-store-ios/https://www.statista.com/chart/33114/estimated-cost-of-training-selected-ai-models/https://sherwood.news/tech/a-free-powerful-chinese-ai-model-just-dropped-but-dont-ask-it-about/https://www.axios.com/2025/01/17/deepseek-china-ai-modelhttps://www.nytimes.com/2025/01/23/technology/deepseek-china-ai-chips.htmlhttps://archive.ph/WMUbbhttps://x.com/pmarca/status/1882719769851474108https://venturebeat.com/ai/tech-leaders-respond-to-the-rapid-rise-of-deepseek/https://archive.ph/vDsQ4https://archive.ph/CrbGOhttps://x.com/nealkhosla/status/1882859736737194183https://x.com/samfbiddle/status/1882882950368473161https://x.com/samfbiddle/status/1882884223008493887 This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe

The podcast delves into the chaotic aftermath of the October 7 attack by Hamas on Israel, resulting in significant casualties on both sides. It discusses the urgent humanitarian crisis in Gaza, with millions displaced and in dire need. The conversation shifts to the roles of Qatar and Egypt in facilitating ceasefire negotiations and the complexities of a proposed three-phase peace plan. Lastly, it highlights the precarious post-ceasefire situation, where tensions with Hezbollah and potential further conflicts loom over the region.

This week we talk about the Pacific Palisades, Hurricane Katrina, and reinsurance.We also discuss developed property values, arsons, and the cost of disasters.Recommended Book: The Data Detective by Tim HarfordTranscriptNatural disasters, whether we’re talking about storms or fires or earthquakes, or some combination of those and other often related issues, like flooding, can be incredibly expensive.This has always been true, both in terms of lives and material damage caused, but also in terms of raw currency—the value of stuff that’s destroyed and thus has to be rebuilt, replaced, or in some rare cases partitioned off so that similar things don’t happen in the future, or because the space is just so irreparably demolished that it’s not cost effective to do anything with the land, moving forward.The four most expensive natural disasters that we’ve been able to tally—so this doesn’t include historical disasters that are far enough back that we can’t really quantify the damage, due to an inability to directly compare, or insufficient data upon which to base such quantification—the top four that we can line up against other such disasters and compare the numbers for are all earthquakes.The earthquake in Japan in 2011 that, in addition to causing a lot of damage unto itself, also caused the disaster at the Fukushima nuclear plant tops the list, with a cost at the time of around $360 billion, which would be nearly $490 billion in today’s dollars.The second most expensive natural disaster is also an earthquake in Japan, this one hitting a region called Hanshin in 1995, causing about $200 billion worth of damage in mid-90s money, which would be about $400 billion, today, and the third was an earthquake not too long ago, the 2023 quake that struck along Turkey and Syria’s border, causing something like $160 billion in damage.The fourth costliest natural disaster hit China in 2008, causing around $130 billion in damage, which is about $184 billion in today’s money.These disasters also caused a lot of casualties and deaths; about 20,000 people died in that most-costly, nuclear-incident-triggering quake, while nearly 88,000 were killed in that fourth-most-costly, Chinese one.The Great Hanshin quake, in comparison, lead to somewhere around 6,000 deaths: which is still just a staggering human loss, but it’s an order of magnitude less than in those other comparable disasters; which hints at the trend we see with these sorts of events—the scale of wounded and killed doesn’t necessarily correlate with the scale of costs associated with damaged and destroyed infrastructure and other assets.The costliest natural disaster in US history, as of the first week of 2025, at least, was Hurricane Katrina back in 2005, which all but destroyed the city of New Orleans and much of the surrounding area, causing around $125 billion in damage, which is equivalent to about $195 billion, today, but it only led to around 1,400 deaths: again, all of those deaths absolute tragedies, and any disaster that causes that many deaths is an historical event. But looking at the raw numbers, that’s a shockingly low figure compared to the sum of the monetary damages tallied; it’s actually remarkable as few people died as they did, looking at this storm and it’s impacts through that lens.What I’d like to talk about today is another natural disaster, this one ongoing as I record this, that looks primed to take the record of most-costly, in terms of money, US natural disaster from Katrina, and some of the implications of this disaster.—Part of why disasters in the US, natural or otherwise, tend to result in fewer fatalities than those that occur elsewhere is that the US is a very wealthy country with relatively high-quality and widely dispersed infrastructure.There are quibbles to be voiced about that claim, as many recent reports indicate that said infrastructure isn’t terribly well maintained, and that the country’s healthcare setup and relatively low pay and support for the sorts of people who save lives and rescue victims in the midst of such disasters raise questions about how long this will continue to be the case; some of these high-quality systems are somewhat fragile, in other words, and won’t always perform at the level they arguably should.That said, in general, when need be, US government institutions—federal and regional—are capable of throwing money at issues until they mostly go away, and they have a lot of decent resources to leverage when need-be, as well. Americans in general also have reasonable amounts of resources to call upon, on average at least, when they need to flee town and stay elsewhere for a while until a storm subsides, for instance.This is all on average, and we tend to see the gaps in that generality when disasters hit, and Katrina is a perfect example of this disaster illuminated dichotomy, as a lot of the country’s least well off people, who have arguably been let down by the system and their government in various ways, were unable to do what everyone else was capable of doing, and were thus stuck in ramshackle and dangerous accommodations, and in some cases weren’t rescued because of the nature of the infrastructure that was meant to help protect them, but which was ultimately incapable of doing so. Other people were shuttled by those entities to other parts of the country while the disaster was being handled, and some were never brought back—it was all a pretty big scandal.Looking at the averages, though, the US tends to experience disasters that are more expensive in terms of money than lives because there’s more costly infrastructure in place, more valuable assets owned by pretty much everyone, compared to many other nations around the world, at least, and folks are generally capable of getting out of the way of stuff that might kill them—at least when we’re talking about things like storms and fires.Case in point is the ongoing, as of the day I’m recording this, jumble of wildfires that are menacing, and in some cases demolishing, parts of the Greater Los Angeles area in Southern California.As of the day I’m recording this, a day before this episode goes live, there are two primary fires still spreading, designated as the Eaton and Palisades fires, those names based on the regions in which they started to flare out of control, and several smaller ones called the Kenneth, Hurst, and Lidia fires.The Palisades fire is currently the largest, having burned about 24,000 acres, followed by the Eaton, which has consumed around 14,000 acres. The Kenneth, Hurst, and Lidia fires have burned around 1,000, 800, and 400 acres, respectively.That’s…not huge. Tens of thousands of acres is a decent sized plot of land, definitely, but for comparison, the Smokehouse Creek Fire that burned through parts of Texas and Oklahoma in 2024, and which became the largest wildfire in Texas history, consumed more than 1,100,000 acres.The Park Fire, which plagued Northern California in mid-2024, is the state’s largest-ever arson-caused fire, and it consumed nearly half a million acres.So a total of just of 40,000 acres or so for this new collection of fires is piddly, within that context.The difference here is that both of those other fires consumed mostly, though not entirely, undeveloped land. And such land, while not value-less, is not the same kind of asset, in terms of dollars and cents, as heavily developed, with homes and businesses and electrical cables and roads and other such infrastructure, land tends to be.These new, Southern California fires are smaller than those other, big-name wildfires, then, but they’re also consuming some of the most expensive real estate, and the properties and other assets build atop that real estate, in the world.As of right now, the Kenneth and Lidia fires are completely contained, and the Hurst is getting there. The Eaton and Palisades fires, the two largest of the group, are still mostly uncontained, however, due in part to wild and dangerous winds that are making containment efforts difficult, in some cases preventing aerial efforts, and in others making conditions extra risky for people on the ground, due to the dynamic and quick-moving nature of things.Given all of this, and again, given that these fires are burning homes worth tens of millions of dollars, located on coastal land that’s in some case worth around the same, it’s perhaps no surprise that analysts are already projecting that these fires could cause something like $50 to $150 billion in economic losses; and for comparison, the aforementioned Camp Fire in Northern California, which also consumed some fairly expensive homes and real estate, in addition to the undeveloped park land it consumed, only tallied about $30 billion in damage, all told, while the fires that hit Hawaii in 2023 added up to just $5.7 billion.Of that $50-150 billion total, it’s estimated that around $20 billion will be covered by insurance, which represents a staggering loss for those without any, or without the proper insurance, but also potentially represents a huge loss for residents of California, as the state has an insurance of last resort scheme called the FAIR Plan, which is a privately run, but state-created entity that serves those who can’t find insurance via conventional, private insurers. And often, though not always this means those customers are in areas that are too expensive or too risky for traditional insurance companies to operate in.In practice, that usually means insurers of last resort have a portfolio full of risky bets, and the plans they offer are more expensive than usual, and tend to provide less coverage and benefits than the conventional stuff.In these sorts of situations, though, we have a whole lot of risky bets than have suddenly come up snake eyes, this FAIR Plan suddenly having to pay out billions of dollars to their customers in these risky areas. And between 2023 and 2024, the number of homes in the very expensive Pacific Palisades area, which is high-risk for wildfires, nearly doubled to around $6 billion of covered assets in that zip code, alone. It’s been estimated that the plan could have something like $24 billion in total losses from this cluster of ongoing fires.The FAIR Plan isn’t government-funded: instead, if it runs out of money because of high levels of payouts, private insurance companies foot the bill, which will place further strain on those insurance companies, which are already expected to be staggered by losses across the region, but also then raises insurance prices for everyone in that area, moving forward, which could further inflate expenses for the state’s tens of millions of residents, while also possibly incentivizing businesses to move elsewhere, which would reduce taxflows to state coffers, and over time cause even more financial problems.Reinsurance claims could muddle some of this math—reinsurance being basically insurance plans for insurance companies, bought from other, specialized insurance companies—as sufficient reinsurance coverage could help the FAIR Plan, and other insurers operating in these areas, weather the storm without being forced to raise prices excessively. But those companies, too, might then raise their reinsurance rates substantially, and those increases would then ripple across this same economic landscape.Lots of potential long-term financial damage, either way, on top of the assets lost and damage caused directly, and of course, the human losses, which as of the day I’m recording this, totals 24 people confirmed killed, dozens of people missing, and a still unquantified number of injuries and lives completely, perhaps permanently disrupted or upended.This whole situation—these fires—are complicated by many factors.The climate is one, as 2024 was the hottest year on record, the first one we’ve experienced, as a species, above that now-famous 1.5 degrees celsius-beyond-pre-industrial-levels milestone. That figure will fluctuate day to day and even year to year due to all sorts of variables, but the big picture here is that the global water cycle has changed because global average temperatures have been nudged upward, and that’s causing a lot of upsets to local infrastructure and ecosystems that have always, since we’ve been here, at least, relied on that cycle functioning in a certain way, within a certain spectrum of operation.Now that we’ve defied that spectrum, we’re finding ourselves with more extreme disasters of all kinds, but also more extreme and dangerous and damaging and deadly repercussions from those disasters, because the things we did to ameliorate them previously no longer work the same way, either.So California, especially this part of California, has been even drier than usual, and the way the state used to prevent the spread of wildfires no longer works the way it used to work; a climactic issue compounded by issues with the systems we’ve clung to, despite the problems they’re meant to address having evolved substantially since they were originally developed and deployed.This situation is also complicated by the fact that southern California, and especially the LA area, is a hotbed for global entertainment, and that means a lot of wealth concentration.Lots of people scrambling to buy and build homes with beautiful coastal views, and the fact that these areas are high-risk for wildfires and increasingly other disasters, as well, doesn’t really matter, because rich people want to be in this area, around all this activity and wealth, and it’s generally understood that wealth can make you immune to these sorts of things, at least most of the time.That immunity is no longer such a given, and that high concentration of expensive assets means that even a relatively small fire can cause a heck of a lot of damage in a relatively short time.The same general collection of properties also means this region has a lot of landmarks that are at high-risk of destruction, and which are increasingly expensive to maintain and protect and repair, and it means the world is watching, to a certain degree—as celebrities flee their homes and influencers report the beat-by-beat of their evacuations—which in turn means there’s plenty of incentive to spread misinformation, either out of a desire to participate in the situation, or because of honest ignorance, or for political and ideological reasons: wanting to paint the local governance as incompetent, for instance.At the moment, folks in the area are suffering from periodic power outages, largely due to local utilities shutting down some of their service areas in order to avoid starting new fires, their power cables and high winds sometimes sparking such things even in less pressure-cooker-like moments. And the air quality is absolutely abysmal, leading to localized health issues.Some areas have run out of water, apparently due to issues with reservoir infrastructure, and one of the two firefighting planes the local authorities have been using to douse the fires when the wind conditions allow has been grounded for repairs, after colliding with an illegally flown drone, the operator of which was apparently a paparazzi trying to capture photos of celebrity homes, either being consumed by fire or somehow avoiding such a fate.Again, this is a fast-moving story, and a lot is changing day by day, but at the moment it’s looking like this could become the most expensive natural disaster in US history, and while local authorities are making progress in halting these fires’ spread, the damage that’s been done has already been substantial, and could have a lot of knock-on effects, for individuals and for the state’s and country’s economy, for years to come.Show Noteshttps://en.wikipedia.org/wiki/Park_Firehttps://en.wikipedia.org/wiki/Smokehouse_Creek_Firehttps://www.washingtonpost.com/business/2025/01/09/los-angeles-wildfire-economic-losses/https://en.wikipedia.org/wiki/California_FAIR_Planhttps://www.nytimes.com/2025/01/08/climate/california-homeowners-insurance-fires.htmlhttps://www.sfchronicle.com/california-wildfires/article/fair-plan-insurance-losses-20025263.phphttps://www.nytimes.com/interactive/2025/01/08/weather/los-angeles-fire-maps-california.htmlhttps://www.wsj.com/finance/wildfire-insurance-homeowners-costs-3889531fhttps://www.newyorker.com/news/the-lede/the-insurance-crisis-that-will-follow-the-california-fireshttps://archive.ph/Inso5https://www.npr.org/2025/01/09/nx-s1-5252837/will-there-be-enough-money-to-pay-out-insurance-claims-from-the-la-wildfireshttps://www.washingtonpost.com/climate-environment/2025/01/09/california-wildfire-palisades-homeowners-insurance/https://arstechnica.com/health/2025/01/public-health-emergency-declared-amid-las-devastating-wildfires/https://apnews.com/article/los-angeles-wildfires-southern-california-c5826e0ab8db965cb2814132ff54ee6fhttps://apnews.com/video/fires-wildfires-los-angeles-los-angeles-area-wildfires-california-574351467d2142ad958c212a0413ad96https://www.reuters.com/world/us/san-fernando-valley-under-threat-los-angeles-fire-rages-2025-01-12/https://www.wsj.com/us-news/los-angeles-wildfires-social-media-rumors-44d224b4https://www.wsj.com/style/los-angeles-hollywood-fires-celebrities-homes-paris-hilton-d1e3a7dehttps://www.vulture.com/article/hollywood-paparazzi-los-angeles-fire.htmlhttps://www.theguardian.com/us-news/live/2025/jan/12/california-fires-death-toll-expected-rise-ucla-threatened-winds-latest-updateshttps://www.reuters.com/business/environment/2024-was-first-year-above-15c-global-warming-scientists-say-2025-01-10/https://www.nytimes.com/2025/01/09/us/los-angeles-fire-water-hydrant-failure.html?unlocked_article_code=1.oE4.OUQs.lcdCoSSeQBtLhttps://www.axios.com/2025/01/11/los-angeles-fire-insurance-losses-billionshttps://www.latimes.com/california/story/2025-01-08/palisades-fire-devastation-scopehttps://www.washingtonpost.com/weather/2025/01/11/los-angeles-fires-california-updates-palisades-eaton-kenneth/https://www.latimes.com/california/story/2025-01-09/drone-collides-with-firefighting-aircraft-over-palisades-fire-faa-sayshttps://www.nytimes.com/2025/01/11/us/los-angeles-calfire-firefighters.htmlhttps://www.axios.com/2025/01/12/la-fires-climate-change-drought-extreme-weatherhttps://www.axios.com/2025/01/12/california-wildfires-loss-mental-healthhttps://www.nytimes.com/live/2025/01/12/us/los-angeles-fires-californiahttps://www.nytimes.com/2025/01/12/us/trump-los-angeles-fire-newsom-bass.htmlhttps://en.wikipedia.org/wiki/Hurricane_Katrinahttps://en.wikipedia.org/wiki/2008_Sichuan_earthquakehttps://en.wikipedia.org/wiki/2023_Turkey%E2%80%93Syria_earthquakeshttps://en.wikipedia.org/wiki/Great_Hanshin_earthquakehttps://en.wikipedia.org/wiki/2011_T%C5%8Dhoku_earthquake_and_tsunamihttps://en.wikipedia.org/wiki/List_of_disasters_by_cost This is a public episode. 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