All right, well, David, welcome to Emerson podcast.
I think now we're at 2 or 4, maybe 3 or 4 because I do it to
actually I was actually on all in a while back.
That's right. And sax and I have been friends
for a while and sax sometimes quits me and I sometimes quit
sax. But things your is your first
visit out of Singapore, No? It's my first visit to
Singapore. What are your reactions?
What do you think? I mean, what was someone told me
a statistic that 4000 family offices have been opened in like
the last 10 years or so in Singapore?
Underestimate. Probably.
Yes, right. Incredible.
And so I've met with a number of folks from that community.
And then obviously there's a lot of business in the region that
operates from here, capital in the region that moved through
here. Beautiful city, wonderful
people, amazing place so. And it's, it's very well run,
it's near everything. And, you know, and if you saw my
tweet on this, maybe you have some thoughts on this.
So, you know, London has already given up the crown to Dubai.
And I think Tokyo and Hong Kong, the capital of capital in APEC
is now Singapore. And now maybe NYC is succeeded
by Miami. There's like a little Miami
boomlet like a few years ago. And now it's like that was like
the that was like the GPT one. Yeah.
You know, before the. Aspirational.
Miami's Palm Beach. I think everyone would aspire
for Palm Beach. They might settle for Miami.
Sure, sure, sure. Yeah.
You know, you know the specific geography of.
Yeah, I think Palm Beach is a lot like Connecticut.
It's like where the hedge funds actually set up versus New York.
There's there's another reason for everything, which is that
Latin America with now Malay is showing more energy than we
thought, or rather Malay showed staying power.
You say you won in Argentina, right.
So with Malay and BA Kelly, you have essentially potentially a
Latin American capitalist renaissance and a non obvious
thing that I didn't know, you know, Antonio Garcia Martinez,
right? So he made, you know, a post
years ago that that Miami is actually the Latin America or
the Singapore of Latin America. Because if you're doing a deal
between like a, a Mexican guy and someone from Paraguay or
something like that, they will tend to do that deal in Miami
because there's people there who speak Spanish 'cause it was like
a neutral third party location. And because Miami is full of
Cuban immigrants, it can't go too far communist, right?
But because full of Cuban immigrants also can't go too
overboard on on the other side as well, right?
So there's an interesting sort of centrist, muscular, centrist,
good aesthetics kind of thing about Miami, where if one was in
the US, I think that's one of the two or three best places to
be. The other place might be star
based Texas. I know your thoughts.
I think Miami maybe has a little less of the aspirational element
that you might find in other call it communities.
It's got a lifestyle element that probably dominates the
aspirational element has been my experience.
People are just so happy to be there and they're just so happy
to live life. That's the vibe.
It's a little bit of a European vibe, but positive European
vibe. But yes, I, I understand.
And Starbase obviously is the pioneering W, which I think is
what's deeply lacking in the United States right now.
It's more of those moments where you and I talked about this
earlier, but you know the vision of Westworld, you get to go live
in the West. You get to go live that
pioneering life where it is an open landscape, everything is a
potential and your actions control your outcomes.
You have absolute agency, but also absolute accountability and
responsibility that fundamentally has probably been
driven out of the United States to large part at this point.
There's a strong push to try and bring it back and to regrow it.
And there's some great pockets of it thanks to Elon and others
that have forced it to happen. There's some decent governors
that are trying to re enable it. But for the large part, I think,
you know, that moment of the Renaissance is over.
So I do think there's a big question of where is it next?
That's one of the big takeaways I take from visiting your
network school here today is kind of reimagining that that W
that we've all, I think, had these dreams and fantasies
about. Wouldn't it be amazing to go to
those empty towns? Absolutely.
And I think, I think the way I think about it is if you go far
West enough, you actually end up either in the Far East, which is
China or in the cloud which is the Internet.
And that's where I think the two frontiers are now, right?
So, and moreover, the Internet frontier, where is that data?
I can I call that the fractal frontier.
So if you take Starbase and you take network tool and you take
the pop ups that are coming up all around the world and all the
special economic zones, right? The fractal frontier, if you sum
up all the territory of all this place, it's actually quite
large, right? It it may be many, you know,
many square miles. I mean, I mean, there's actually
something called the open zone map that we can put on screen.
The open zone map shows hundreds and hundreds, hundreds of
special economic zones globally, right?
And the the thing about that is you get a sense of how many
countries want something like that right here.
Let me pull it up. Wow, right.
Why are there so many in the United States?
Where is that? That's where I'd like to under.
That's right. So these are like what are those
kinds of like this is the office of Joint Economic development.
They should like various offices, they take an expansive
view of what a zone is in this map, right.
But certainly in Central Asia, like China's like suffused with
them, right, Where they have, you know, drone zones,
manufacturing zones, this zone, that zone.
Sorry, who defines these? There's a, there's a group
called the open zone, open zone map group.
OK. But I think that you can like
when you have this perspective, if you take a list of all
special economic zones, you take a list of all of the sort of
ghost cities or startup cities. You take a list of all of the
abandoned houses in Japan. You take a list of all the
actually the towns for sale in America.
Have you seen that? Yeah.
So you take all of that. That's the fractal frontier.
And the tricky part is moving one person out of time has been
hard. If you move 100 and we can
coordinate with the Internet, then we can actually go and do
that. So I think we can it just like
Bitcoin, the key was going decentralized and then we can do
it. Yeah, yeah, because I think
everything else is the opposite. Yes.
Like the the absence of that environment is unfortunately
gravity. Well, yes, which is very
difficult to escape from you. Know it's funny you.
Say, when I say escape, I mean productivity.
Escape velocity, right? Escape Velocity.
Dr. Productivity. It's funny you see this because
actually a lot of statesman in America understood that the
frontier was actually the main thing that was keeping America
going. Like Frederick Jackson's
Turner's like frontier thesis that the closing of the frontier
in 1890 was like this very important before and after
moment. And in fact the four closed.
There were guys who wrote something like, you know, it is
because a frontier exists that even if someone's dissatisfied
with their lot, they can always be told, go West and, you know,
you've got empty land. It's like having a domain name,
right? And actually, the cause of
frontier closed that started trade unions and communism
because it was like a steel cage match for the world.
Everyone's boxed in. They couldn't go and just do
their own thing. In 1991, with the Internet, the
frontier reopened. No, I think that's possible,
unfortunately. I think there's governing rules
that exist that then, you know, we thought the open Internet was
that moment. We always talked about the open
Internet in, you know, the early days.
It was going to reinvent how governing bodies have reached
how they operate. And I think it wasn't.
And you're obviously the crypto person, but I don't know if that
promise in the natural evolution of the open Internet and then
what I would say it's probably much more of a controlled
Internet nowadays has really allowed that it's we'll.
Go ahead for research. Yeah.
No, no. I mean, I think it's a function
of like the Internet became more of a pipe than a place, and the
place remained the traditional governing structures.
So I, so this is what I call like network versus state,
right? And my view at least is the
state has won in the East, but the network is winning in the
West. Like that's to say, like the
Chinese state is definitely dominant over the Chinese
network. But I actually do think the
American network is stronger than the American state.
And the reason I say that is, for example, politicians who are
popular on social media can now go to the left and to the right
of their respective parties. Crypto defeated the forces that
were trying to stop it burn air, even be I'll be at taking
casualties like you know. Got velocity?
That's right even and to be clear, it's like, you know,
Saving Private Ryan, the opening scene, right?
You you watch that movie and you know that the allies are going
to win, but they do take casualties right, right.
So I know that tech is going to win and we took a casualty like
Travis Kalanick, you know, got, you know, attacked by by the
journos in 2017. Travis did nothing wrong.
Travis a good man and actually was just on all in I think
recently a little while. Ago, right?
Yeah, he's come on a few times. That's great.
Yeah. Basically I think that whole
thing was just something which was the media attacking, you
know, essentially like a like a tribal enemy basically.
And so, but nevertheless, Uber still won, right, Right.
Like Uber, Uber might have been a trillion dollar company had
Travis remained there, it's true.
But ride sharing one, they couldn't stop that, right?
So let me ask you this. Yeah, because I I think that
part of what made Uber win is it it it was a better product.
It was cheaper, it was faster. But there's the gravity wells.
The gravity well in this case would be a union taxi
medallions, the governing structure of New York.
Do you think Uber could be successful if it launched today,
given the governance we see in cities in the US today?
And how much perhaps more difficult they might make it
today. Well, look at Waymo, look at
Tesla robotaxi, right? Like those are kind of
comparable. Uber paved the way.
I mean, don't you think that like things have gotten tougher
to do business in these cities? It's gotten much more
controlled, It's become less open.
It's. Both at the same time, right?
Like basically they are fighting harder, but net net, if you net
it out and you ask when the dust is settled, like 2 years later,
three years later, four years later, I expect the network to
triumph over the state in the West and expect the state like
by contrast, in China, Alibaba was genuinely like seized right
by the government, right wings clipped tech defeated over there
right in, in in the West, though, Bitcoin beat like BTC
was greater than NYT, right? Bitcoin was stronger, NYT
launched all these attacks and so on.
And so I think the final sort of grudge match, you know, like a,
the final four and like a, you know, NCAA final four and what
have you, right? So as we go up the brackets,
right, like it's CCP versus BTC is like the China versus
Internet is where it's going to be eventually, right?
I, I think what you're seeing, which is true, is that these
state governments are getting meaner and nastier.
They're also getting Dumber, right?
Like, for example, when they're saying like millionaires and
billionaires, it's like saying meters in kilometers, it's like
1000 X difference, right? It's like a small thing, but
there's there's so few of them who have any numerical acumen
and because of that they can they can do it on I mean, how
does. It it's like saying meters and
kilometers when you're supposed to be talking about gallons and
oz. Yeah, that besides the point.
That's right, like a billionaire's, like a
billionaire's completely different from a millionaire.
Right. Are you talking about cronyism
versus? Right.
Yeah, exactly. That's right.
That that's the right enemy, wrong enemy, cut of things.
That's right. And in fact, actually another
reframe on it is many of them are political billionaires.
Did, did we talk about this? It's like take, take the budget
of San Francisco for example, last I look is about 13, you
know, 13 billion + a year. So you take the supervisors plus
the mayor and divide the budget into this.
They're basically each allocating a billion in cash per
year per person. They're political billionaires.
Now the the thing about this, by the way, they're actually much,
much, much wealthier than a typical market billionaire
because a market billionaire has 1 billion net worth over their
entire life, of which maybe they can liquidate 10,000,050
billion, right? But a political billionaire is
out allocating a billion in cash per year.
So over 20-30 years they are like 10 to 100 X the allocation
of capital. The degree of influence.
Yeah, that's right. So the.
Political, which ultimately could be the way you could
measure the value of the capital is how much can you affect the
things around you to realize the things you want.
Which by the way, is why I always talk about the state
being an Organism on its own, competing with the other
organisms, the other organizations which are
aggregates of people that self assembled and said let's form an
organization to do this thing. The state, local, state level,
federal, whatever national are their own organization that
fundamentally have their own growth state in a system just
like biology where they are trying to consume and they are
trying to get bigger. And they are because the
individuals have the same objective as the individuals do
in any other organization, which is to maximize influence.
That's right. And actually on this point, I
think this is really like, this is a deep insight for me at
least the state is their startup.
That's right, right. Like for all these, you know,
nonprofits and I was, you know, this is A1 liner, I'll probably
treat this nonprofit equals anti profit equals communists there
you can get there in 2 steps, right?
So for all these, the nonprofits are really more like anarcho
communists, but they still like the communists get their funding
from the state. The difference is they're not
all directly reporting to the state.
They're all just given money by the state.
And then they do all these crazy things like the managed alcohol
program that you, you want to talk about that like this crazy
kind of thing. Yeah, I mean, I talked about it
on my show, but you and you and I were talking about it earlier
that the city of San Francisco has a managed alcohol program
where they will give out beer and vodka to to homeless
Alcoholics that they can come and get any time of the day, 24
hours in hotel lobbies where they walk in.
They are given either they can chew the vodka or beer, they get
a shot, they get a beer, once they've consumed it, they can
get another one. And they can just keep doing
that under the premise that they're more the less likely to
go to a hospital if they're under the observation of someone
observing them get drunk rather than running off and having
uncontrolled alcohol. Which at the end of the day,
there are reports that they've given out seventeen shots of
vodka in a single night, right to a homeless person.
And this is like a 5 to $10 million a year program for the
city of San Francisco. I pulled all the 490 forms for
those nonprofits and tracked down where all the funding went.
And it's basically a network of NGOs or nonprofits in the city
where people that work there are making, you know, pretty decent
wages doing this as a business, Which goes back to the point
this is another. And, and it doesn't mean to be
negative about all nonprofits, just to be clear, because I
support some nonprofits that have good work.
So I don't like the label of the the nonprofit being bad.
But there are structures, organizations that have
assembled that have identified a way to get capital and to then
use that capital for their own benefit.
And yeah. No.
And I think that's what we see like the way I think about
systems are what are the organizations, the components of
the system, the system that that the system that arises from
capital, which is a a measure ultimately of influence and
access to assets realizes all these different organizations.
You can create a school, you can create a state government, you
can create a little NGO. We can create a club.
We can also create a business, a nightclub, a restaurant or an
international business. And so these organizations are
these assemblies that are basically competing in an
environment to try and consume capital.
So at the end of the day, the state organizes itself such that
it will always end up wanting to accumulate more capital because
it's distributing itself where every individual in the system
has a benefit if they can get access to that distribution.
That's right. So that's why the state
ultimately always becomes so big.
I think my measure is that in the United States today, it's
probably the case that half the population, more than half the
population are earning the majority of their income,
whether it's retirement income or earned income from a federal,
state or local government or a government contractor or
retirement check or some other sort of benefit pension or
insurance program that's supporting their their business.
So when you add that all up, it's the majority of Americans
now. And that's when I think you
crossed the point of no return or at that point, the state has
now consumed everything because everyone has every incentive to
not have it stop growing. Whereas before you have natural
market forces with these other organizations that are competing
and they're saying, wait, that's not fair that the state has
this, you know, outsize influence.
But once it crosses that threshold.
You're absolutely right, by the way, that there are some good
nonprofits. It's a little bit like people
can understand, for example, that there are good priests, but
there's also like evil priests that will use the good
reputation of priests to do evil, right?
And, you know, one of the things that has certainly happened in
the USII don't know even what fraction of nonprofits are good
versus evil. But I do think that in San
Francisco, the homeless industrial complex budgets are
up and to the right. You know, in 2020, past like 1.1
billion a year, cash as a homeless population goes up.
Isn't that crazy? No.
No, the whole thing is just. It's so obvious.
The more money you distribute through this network, the the
more the homeless population will swell.
Exactly. And the less you're going to
solve. That's right.
There's no natural market force to solve the problem in that
sense. That's right.
It's. Yeah.
So these guys are the feed the pigeon society in a sense.
I I call them they're they're because all look at all these
pigeons. We need to feed more pigeons,
right? But really it's even worse than
that because they're Democrat drug dealers.
Let me explain. They are securing the real
estate, the quote safe injection sites, they're handling the
supply chain, which is handing out the syringes.
They're doing all the legal work with the various legal clinics.
They're basically doing, they're putting up the billboards, which
are like the no overdose billboards that say snort or
smoke crack. Literally billboards that say to
snort or smoke crack. We can put that on screen rather
than to they literally tell people to do drugs, right?
And they do all this with the attitude that you mentioned with
the managed alcohol program, which is like a faux wise, oh,
boys will be boys. You don't understand.
We can't just tell them to have no alcohol.
We need to, they're going to do it regardless of us.
So let's enable it and do it in a safe amount of this, like the
handing out of Narcan or whatever.
Right. And So what what's really
happening is they are McKinsey for MS13.
Yeah, right. They are doing everything other
than putting the needle in the addict's arm, though.
They're putting the needle right there and they're shooting away
the police and they're letting the drug dealers in and they're
removing the legal consequences for it.
So they're just setting up all the propitious conditions for
massive drug abuse. And their business model
innovation is to not take a cut of the fentanyl transaction,
which is like 10 bucks or something like that, but to take
a cut of the billions for fentanyl prevention.
Because what happens is some homeless addict, and really
they're more addicts and mentally ill than homeless per
SE. To not have a home is not the
same as to be mentally ill or a drug addict and being fed with
drugs by these Democrat drug dealers.
And then what happens is, and because these addicts are the
victims of the nonprofit's, that's the key thing, they're
abusing them. It's like munch and house
syndrome by proxy, right? Then the addicts go and they're
driven out of their minds by these drugs, drugs, and they go
and smash and attack something. And then what happens?
The victim of that then says, the victim of the victim
basically says, OK, I need to vote to solve the homeless
problem. And in this moment, they vote to
allocate more budget to the Democrat drug dealers that are
causing the homeless problem. This is my point.
So, so the, the mechanism is that the state, the individuals
in the state, which are the politicians or the state
administrators who by the way, I don't think necessarily are all
or necessarily, you know, malintended.
I think in their mind, they think the only tool I have,
because I've only ever had it is a hammer.
And that is the state. So in every and by the way, for
from my perspective, I would trace this back to the New Deal
of the United States. Sure, sure.
Which I think was the turning point for the United States,
which I think we should talk about.
But so, so they're, they raise their hand and they say more,
not less, more. This is also why I think you
reach a moment where socialism becomes runaway in the United
States, which is we're at that moment now, because if socialism
doesn't work in New York, as Mom Donnie has promised, the answer
won't be socialism doesn't work. The answer is we didn't do
enough more. And so in the same sense, the
state representative, whether it's the politician or the
administrator, raises their hand and says more.
Give me more money to solve the homeless problem.
And that feeds the beast. So now that organization is
bigger, it's consuming more capital and it continues to go
in that vein. And then the problem gets
bigger. And I think the same thing has
happened with the cost of housing, the cost of education
and the cost of healthcare in the United States.
Because we made a promise, The state administrator or the state
politician has said since the New Deal, we've developed a, a,
a repeated kind of statement in this country, in the United
States, that we can do more to give you more, Mr. Citizenry and
the citizenry because of the democracy and this is the
natural state of the system and how it evolves, says, great,
that is the answer for my problem.
You, you do more, so I will give you more.
So we set up a Federal Home Loan program.
We set up a federal student loan program, and we set up Medicare,
Medicaid to support healthcare. As each one of those were set
up. The federal government takes
money and funnels it into those programs, and as a result
there's no market check. So in the case of education, the
colleges can charge more every year and the student is free to
just get more loans, and every year the loans go up.
So the college administrator rationalizes I can make more
money by becoming a manager instead of remaining an
individual contributor. My salary will go from 1:30 to
200 if I become a manager and hire four people.
Fast forward 30 years, 10% of staff as administrators to 60%
of staff as administrators. Tuition goes from 30 to 60 K.
And that's because the federal government has unrestricted
underwriting. And if there was a free market,
then a bank would underwrite the loan and the student would have
to prove that they're getting a good degree at a good college
that will make money and that the tuition is reasonable for
the value of what they're going to be able to do afterwards.
And if they don't, the bank will say no.
Then the same happened in the Federal Home Loan program, which
caused housing bubbles. And then the same happened in
healthcare because of Medicare and Medicaid.
And the cost of drugs is largely driven because of the
government's involvement. And then everyone says the state
administrator and the politician, I can solve that
problem, give me more money. And then it literally fuels the
fire and you're pouring gasoline on the fire.
And we get to this moment that we're in today.
That's right. With that said, I, I want to, so
there's like 3 or 4 things are all good things.
I want to kind of so Mumdani and the Mumdani machine there is
the, there's the housing, education, healthcare piece,
which is kind of, and then there's the new Deal.
So go in those layers, right? So on the Mumdani machine point,
like what I think a very important distinction that we
see in communism, but that's also helpful in America.
And so, you know, sovocism is the Communist Party and the and
the people, right? Lots of things that the
Communist Party did were actually relatively good for a
party member, even if they actually made the whole country
in themselves poorer in absolute terms, but worse for the people.
And so for a lot of the Mamdani machine, the nonprofit's will
make money on this, right? Like that's to say they will get
their salaries because they will just let's say that 17% of the
city or something like that, they will raise taxes, pull in
top line revenue and the political billionaires will
allocate it to the nonprofits through their actual clientele.
These nonprofits are basically essentially the they're they're
government employed activists indirectly, they get a budget
from the state eveniftheyarenot.gov addresses.
To call them an NGO, you have to actually, you know, you don't
have to call a company a non governmental company, right?
A non governmental organization. It's like they're so close to
the government, they might as well be the government.
So you have to call them an NGO because of that, right?
OK, So these once we realize actually that that's their viral
loop, right? Which as you said, but basically
it is cause a problem, reallocate the monies to for the
problem to cause more of the problem.
And, and the thing about the intentions, by the way, I will
push back a little bit on that. Actually a lot in some ways
because they're, they're, they, they're good results.
Forget intentions for a second. If we just look at the numbers,
the number that they're making go up is the budget of their
nonprofit. That's what they're really
focused on. Like everything else, they're
like, oh, you know, bad things happen.
I guess you know somehow the needle, that's the.
KPI because of my uncontrollable circumstance.
But if their NGO budget went down, now they're on it like a
hawk, right? So if they, and the way I put it
is if they're so woke, why are they so rich, right?
If this was truly something that was for the good of the people
blah blah, set their budgets to completely 0 right defund the
NGOs. In fact, even defund the police
was fund the NGOs right What they wanted to do if you if you
decode what they were saying, take the money away from the
police Reds and give it to social services Blues.
It was another kind of scheme the the Dem scam to take money
away from the functional part of society and reallocate it
towards basically blue jobs. Another example is $100 billion
California train. And all of this I actually
traced back to. I love that train.
Yeah, go ahead. Yeah, the, the, the feed, the
California train feed, it makes clear that they, they, they
always talk about jobs, jobs, jobs on that feed, not rails,
you know, miles of rail, right? It's like the Milton Friedman
thing about, you know, the people in China is apocryphal.
But, you know, they were using shovels and he's like, why
aren't they using, you know, cranes to dig?
And they said, well, it's creating more jobs, so why don't
they use spoons then, Right. So California took that
literally and they built like, like less than a mile of track
or something ludicrous. They put a photo of it, right?
They made the mistake of putting a photo because then it was
actually clear amidst all the obfuscation that it was just a
giant bribe of Blues. But they're again, their
innovation is not to give a billion dollars to one person,
but to split that billion dollars over 10,000 people times
$100,000 a person. So that each one of them
basically has a make work job in the, in their, their political
constituencies, right. So that kind of thing, whether
it's another example is the Podesta 376 billion for green
stuff, right. Once we realize like the blue
business model is capture the state and then capture the money
and their version of going. Public and you flow the money
back out to the people that voted yes.
That's the model and I've seen it if you watch any Senate
confirmation hearing you can observe it yes, because the
questions the senators will ask the government administrator
that they're appointing or approving is I have this program
in my state. It creates this many jobs for my
state. Are you going to take away that
program That's the number one thing they always focus on and
as long as that the the answer is I will not take away that
program. They say great, you, you are now
confirmed. That's right.
And that confirms that the capital will be sucked up and
reallocated back to their interests and they are competing
for their particular constituents to get their flow
out of the state. And that is why the state gets
bigger and bigger. That's right.
And I think actually one of the consequence of that is.
By the way, it's, it's, it's, it's, it's socialism, it's, it's
government employment for everyone.
And we don't realize it. We don't realize how much of the
capital is flowing to individual, what percentage of
people have capital flowing to them.
That's right. In the state, what's what's
happening is there's now 2 ledgers that have arisen outside
the American state, which are China and crypto, which they
can't do this in the same way. Like because the Chinese have
their own sort of sovereign system and Bitcoin and crypto
have their own sovereign system. And so because of that, and
they've tried with the trade war and with the, you know, the war
on crypto, they tried to shut down these alternative systems
and they've now failed basically declared defeat.
Both Republicans essentially have declared defeat, I'd argue
on, on China on the trade war. Democrats were defeated on, on,
on crypto. And So what that mean?
I'm not saying good or bad or just, I'm just observing what
that means now is this system has true competition.
So all of the failures that you're talking about, like the,
you know, or the viral loops and so and so forth.
Now there's a consequence because it can't just it can
capture the money within its sphere, but it's losing control
because more things are exiting its sphere.
Once something goes on chain or in China and you know, in on
chain or in China, then blue America can no longer tax and
control it, right. And actually, one, one thing is,
if you notice, quite a lot of Blues are just for taxes
broadly, right? Part of it is to attack their
hated enemy of the libertarian capitalist, you know, tech guy.
But part of this also, you know, Zuck's thing with intranet.org a
while back, right? Well, OK, you know how like
Google and Facebook have various initiatives get everybody
online? Yeah, Yeah, that's because.
Laptop per child, 1 billion others, 3 billion others, all
that stuff. That's right.
And you know, I think 1 laptop
per child was actually very successful in the form of the
Android smartphone. And that's, you know, motivated
it. Yeah, and motivated it.
That's right. But one of the things we take
for granted sort of in our so as people of the network as opposed
to people of the state. So roughly, I'd say people of
God are the conservatives, people of the state are the
progressives, the Blues, and the people of the network is tech,
the Internet. That's like us, basically,
right? And there's some overlap there.
Nothing's ever totally clean. But for us the equivalent is
grow the network, right? That's a more Internet
connectivity generally good. Facebook's thing was making
everybody connected, Google make the world's information
organized, open source, and so on.
So we want to increase the scale of the network as distinct from
the state. That is, in my view, the main
counterbalance to the state today.
And actually, you know, that exists in the past, but it's the
strongest it's ever been in history because it's like
formal, that is to say markets existed, peer-to-peer trade
existed. The network is sort of the
peer-to-peer aspect of humanity. But now it's like digital and
stronger than the state after hundreds of years where it got
stronger in fact. So the new deal points you want
to talk about that, right. So once you elaborate on that
point and I'll give and I. I just think that there was this
moment in American history when prior to this moment, America
was built on originally a notion of, I would say, rugged
individualism. But like shedding the state,
shedding the monarchy, moving here, enabling individualism,
enabling. And again, I, I, I, I, I think
that collectivism ends up deriving tyranny in its absolute
sense to have everyone in a socialist system or communist
system, really a true communist system requires some
extraordinary controls and, and, and limitation of individual
liberties. So the more collectivist you
become, the less liberties. The fewer liberties there are,
the fewer individual liberties there are, which means the more
tyranny there is. And that's why I just don't
think you can have socialism without tyranny.
So America was founded on the principle of this true
individualism, on this lack of tyranny, this lack of taxation,
this shedding of the monarchy and enabling individual agency
where everyone has an opportunity to realize their
full potential, whatever they want it to be, because the
tyranny is now gone. But everyone also now has
accountability. If you don't perform in society,
if you don't exceed, if you don't succeed, if you don't meet
a minimum limitation, minimum limit, you're you're going to be
left alone. You're you're going to suffer,
you're going to struggle. So the question then became at
some point that had to break, which was as more people suffer,
as more people struggle, there's a moment when that group of
people has empathy and they say we have to solve this problem.
And that's where the state flips from being initially a state
that is really driven by its limitations, 1% income tax,
we're not going to do anything. The state's going to stay out of
your way, individual rights, total freedom and liberty to we
have to do something. The state is responsible for
solving the, the Great Depression.
And so the New Deal meant to address the problems of the
Great Depression from an empathetic note, which was, hey,
people are suffering and there's no other solution in a free
market. The, the market failed and
there's other external factors that are preventing individuals
from just having a basic standard of living.
And in that moment you started the pattern and the progress of
the state saying I can do more and I can provide you a higher
order of living and then a higher order of living.
And so you went from the New Deal, to building highways, to
building suburbs, to funding home loans, to funding
education, to funding healthcare, to doing literally
anything and everything that a politician could dream up to
provide a better standard of living for every individual.
Which fundamentally breaks free market forces and ultimately
leaves everyone begging for the next teat to be able to just do
anything. Which is where we kind of start
to find ourselves today. I completely agree with the the
diagnosis of where we've gotten to insert in the USI.
I'll offer a few given that I'm generally sympathetic to this
view, let me offer not exactly counter arguments which
alternate perspective I found help great help.
OK. So the first is, I think of the
last 500 years from 1492 to, let's say up to 19501492 to 1950
was a period of increasing technological centralization
that was offset by the discovery of the frontier.
So that's to say, so basically, let's say 1492 to 1890, you had
the Americas you so you had dozens of startup countries
basically because you also have the South America, you know,
Latin American things, right? And you had, you know, North
America, there's Canada, there's the French Empire, there's all
these guys duking it out. And just like, you know, amidst
all these search engines Google One amidst all these American
startup countries, like the United States, America one,
right? And so the presence of that
frontier meant that there was more productive things happening
there. Whereas in Europe, there's more
in the way of just warfare back and forth.
In fact, like the Puritans actually left the conflicts of
England. In fact, at different points in
the English Civil War, the left side went to Massachusetts and
the right side went to Virginia, right.
And so the various, you know, the the Roundheads went to
Massachusetts, the Cavaliers went to Virginia, and then 200
years later they had another Civil War in America.
And now 200 years later we're having another the cold Civil
War basically between the same set.
It's like deep cultural history, right?
So in some sense, you know, people have said the American
Civil War is actually about the English Civil War, right?
They these two types of things fight.
OK, so but on the point about FDR, there is I'll give a
partial granting everything you're saying, I'll give a
partial qualified defense of FDR from someone who's as critical
of him as. You and by the way, I'm not
being critical in a sense that it was the wrong decision.
No, no, I'm just highlighting at some point there's a moment
where civil society recognizes the needs of a certain
percentage of the society and then they try and organize and
the typical organizational model is the state to solve the
problems of that particular part.
But the problem is, once you crack that egg, there's no
putting it back in the shell. That's right.
So here's a few things which at least were helpful lenses for
me. You know, for the first is FDR
was the least bad communist dictator during a period where
technology favored communist dictators, Right, Right.
Or if you include, you know, let's call it collectivist
dictator, you include Hitler and so on and so forth.
So Hitler, Stalin, Mao, etcetera, etcetera.
FDR was like the least bad. Yeah, right.
So he only implemented like 90% marginal tax rates, not 100%.
Yeah. He only implemented the Japanese
internment camps, not the gulags or the concentration camps,
Right. That's that's faint praise, but
it's it's true in a sense that he was like the the least bad
communist dictator. And in fact, there's this great
book called, gosh, it's like 3 new deals.
You might have you seen this one?
OK, you'll like this one. It actually shows how FDR was
actually enamoured with Mussolini and Hitler and and so
and so forth before World War 2, right?
There's a lot of influence from both the Nazi and Soviet side
prior and and vice versa. Like American ideas went to
Germany, went to, you know, the, the, the Soviet Union and so on
and so forth. OK, so, but I would argue that
the FDR thing is actually part of a broader centralization arc.
For example, 1865 was the moment when people said the United
States is as opposed to the United States are, right.
So Lincoln was another force of centralization. 1776 actually
really 1789, you know, after the American Revolution, less well
known as something called like Shea's rebellion, right, where
people essentially tried to invoke the same American
Revolution concept of the right to break free.
And then George Washington put it down, right?
He said, actually you can't exit anymore, right?
So there was a centralization arc, not without its reversals
and so on, but broadly centralization up till 1950,
both in America and actually outside.
Why she had like the unification of Italy by Garibaldi.
You had the unification of Germany.
You had the, you know, the French Revolution.
And the thing about the French Revolution is normally you and I
and many people like us, think of leftism as something which
just disorders society, makes it chaotic.
Think about the guillotine. Think about the chaos of the
French Revolution or the chaos of, you know, the the Russian
Revolution. But there's one thing that we
have to contend with, which is somehow out of that chaos, they
fashioned this crazy organized military machine, which
eventually, you know, Napoleon's army or in Russia after Russian
Revolution, the right army. So normally a company, for
example, that's truly in total chaos just can't do anything.
It just collapses and everybody quits, right?
But there's some underlying logic to leftism, and it's
neither something that the left nor the right talks about.
I think the left will say it's all sharing and caring, and the
right will say the left is naive.
But really, I'd say the left is just like a Voltron death beast,
OK? It's meant to take large numbers
of people, unify them into like a Voltron, and then laser eyes
just become a killing machine, right?
And then basically force. That's what common.
Vacuum too. Vacuum too, right so it would
flip country after country into communism, pull them into the
envelope, right and then turn them like into conquerors and so
on and so forth, right. So if you think of it as like A
and, and it's there's a lineal relationship to basically
Abrahamic religions like Christianity and so and so
forth. It's evangelistic, it's
egalitarian. Everybody must be converted.
If they don't convert, they will die.
You know, they die by the sword. They live under our rules.
We know what's good, right? There's something there to that
right? And that's got a power to it
because it's evangelist. By contrast, when you compare it
to the alternative, if you're just stay at home, like think
about in our tech companies, right?
You know, there's various people who have at various points
champion lifestyle businesses. The lifestyle businesses are
basically almost as hard to run as like a big business because
you're still ACEO, you're still responsible for everything.
You have no one. You can't sleep because you
can't delegate to anybody, right?
Lifestyle businesses mean the business is your life, right?
You. There's no possibility of an
exit and you can get crushed by somebody who's just playing for
getting big and they build this giant Unicorn.
They can take your market. There's no nonlinearity or yeah.
Yeah, exactly. And so that's actually what
happened with all the places that tried to not play the big
guy game. All the city states got rolled
up into nation states. Yeah, that's right.
That's right. And so, like, ever been to San
Marino? I've not been.
OK, so that's this amazing like duck bill platypus, you know,
it's like it's like a it's like a missing link, you know, kind
of thing like a duck bill platypus.
It's like it's like a mammal that lays eggs, a rare kind of.
So San Marino is a rare city state that survives to the
present day because Garibaldi took refuge in San Marino when
he was unifying Italy. So he sort of spared it from
forcible unification, right? So it still has its own UN
membership, its own sovereignty that's jealously guarded through
the years, right? And it's like this 30,000 person
thing, right? So it's a piece of the past that
is still here. So the reason I say this, once
we understand, in my view, the logic of it, there's this
technological centralizing force, but the frontier was the
alternate geographical force that was like a pressure exit
valve, right? And so that's why lots of
Europeans left Europe for the for Americas.
They want to leave the wars of Europe.
They want to leave the revolutions of 1848.
They left the Irish potato famine.
They left, you know, like all kinds of things in Poland,
Italy, all kinds of chaos and they came to America.
OK, fine. So then at 1950, I would
consider that historical peak centralization.
You had the minimum number more political units ever, like about
50 UN members, right? And because you had all these
giga states like, you know, the USSR and China that have just
formed and obviously USA, hundreds of millions of people
under 1 banner. And it was a time where there
was like 1 telephone company and two superpowers and three TV
stations. And then the transition was
invented. And that began a rapid
decentralization arc that's occurring almost 10 times as
fast as the centralization arc. So you go rapidly transistor and
you have like cable TV and you have the personal computer and
you have the Internet and you have the smartphone, you have
cryptocurrency and you have open source IA models and zip like
this. We're unwinding several 100
years of centralization in several decades of
decentralization. And so that's why I think the
Western state is going to lose to the network.
It's just like if I, if I track various metrics of steep
capacity, if I track all that stuff, it it seems to go away.
Let me pause there and I'll give one more argument.
The western states are going to lose to the network.
Yes, meaning that what I mean to that is for example, the S&P 493
versus the S, the Magnificent 7, all of the legacy American
economies basically being shut down and the and it's all going
towards Internet companies or the money is going towards
digital asset treasuries, which are like Internet currencies,
right. And you can see this like when
everybody's, whenever anybody was giving me the bowl case on
America, the part that was working was the Internet.
But the Internet in my view is as American as America was
British. Like now.
Like it's version 3 point O. Do you think that the current
government, the current federal government, the Trump
administration, and the effort to reindustrialize manufacturing
in the United States with government support creates a
different environment that actually gives them a shot?
I like a lot of these people. I think they mean well and I
really think they mean well in the sense of I don't think
they're doing the profit maximizing thing and so on and
so forth. But I don't think it's going to
work for. In fact, I already think it's
kind of, or at least like this, there may be some long term
success that comes out of it, but it's not going to work on
the time scales that people think it's going to work.
And it's not going to work to save the political entity.
Like in the sense of, you know, the USSR was a political entity
that did not survive. Of course the land survived.
The people survived. Russia exists, right?
Ukraine exists, Estonia exists. There was essentially a national
bankruptcy. But if you're right about the
digital, the network state, there's still a demand curve
that is unmet for energy production, energy capacity,
which has an inherent kind of, you know, economic driver has an
inherent kind of economic stratum.
There's infrastructure, there's layers that need to be built.
And that's inevitable if if what you're saying is true.
And also if what you're saying is not true, it's also
inevitable. Well, I I guess.
Or. Or do we just stall?
Does energy become the competitive force that.
So there's several kind of layers.
So I think the first thing is I just start always with
calibrating with numbers, right? And very few people who I talked
to about reindustrialization and so on want to really engage with
like, the reality of what China is, right, Right.
Yeah, it's two terawatts going to 8 by 2040.
It's the United States. Is 1 going to two?
If we're if, if everything. Goes and by the way, the China 2
to 8, they're outpacing forecast and they have several new energy
technologies that didn't exist in the original forecast.
And they don't have anti nuclear activists and they're not.
They're doing both nuclear and solar.
And America is doing neither nuclear nor.
Solar, or at least the nuclear rollout, is insane.
It's insane, right? So but and so energy is one
piece of it. But really what it is is like
the high tech part is absolutely 1 lens on it.
But let me look at some other lenses on Chinese society,
right? So first of all, they've got
intact families, right? They've got the kids going to
school. They have, you know, basically
like, no crime, right? They have like, gleaming cities
and like, the public infrastructure is there.
They don't have like graffiti and you know, on the subways and
stuff like this. The train station looked like a
spaceport. Yeah, Star Wars.
That new video that came out of that new train station that
opened up. Now the thing about this, by the
way, is like the Chinese people really suffered to get here,
like their last 200 years were complete Mad Max.
So even if they got to suffer for the next decade, they're OK.
I mean they could, they could take some hits is my point.
Yeah, exactly. There's people who have grown up
with like basically going through the Cultural Revolution
like they're boomers did not have a great 1960s and 1970s.
I was not summer of love for them, right.
So they're. Just any environment they're in
today is better than where they came from.
Exactly. They're kind of at least among
the older generation, some of the younger ones have only grown
up in a China, which just is amazing, right?
So, but there's a consequence of that as well, which is they
don't look up to the West, right?
They think there's there's a Chinese version of almost
everything the West has that's often better or even ahead of
the West, right? Like China has flying cars, you
know, E hang and all the stuff. And, you know, when I post
videos of this, people will say that I post this video, which is
like, we wanted flying cars. We got them with Chinese
characters. It's kind of like, you know,
it's a riff on the right. So E hang, it's basically like
giant quadcopters, right? It's like, you know, the, the
iPads are scaled up by phone. Yeah, yeah, yeah.
It's like a scaled up DGI. OK.
And people would say things like it's not a flying car.
It doesn't have wings, It's not a flying car, it doesn't have
wheels, It's not a flying car. It only just short hops.
And I'm like, you know, they, they, they're stuck within a box
where they refuse to admit or when I show videos of the
Chinese. Cities.
I'll give you a statistic. In 2015, ten years ago, papers
published by Chinese research labs and major scientific
journals were about half of the United States.
Yeah. Now 50% more than the United
States. Yes.
And in every category, almost Life sciences.
And about to cross the life sciences probably this month or
next month. That's right.
Every category. Material science, Physics, Math,
Computational science. They do not have the
walkification of education that happened 12 years ago.
I think, you know, people talk about a pipeline problem.
I think part of the issue is like something really happened
to like American SAT scores starting around 2013 or so.
You can see like, you know, them kind of drop off like this among
especially among like white American kids, right?
It kind of just drops off. And I think wocification is part
of it. Like why now 10 years later,
there's grads who are less there.
Others will blame it on phones. One of the things, by the way,
that's going to be a big thing the the anti tech movement in
the US is going to be very big because the left is against
capitalists. The right isn't as fond of
immigrants nowadays. And the center, like Jonathan
Haidt, who I like, he's a, he's a smart guy.
Jonathan Haidt, Summit and Derek Thompson, other guys like this
are starting to blame it all on the phones, right?
And in fact, there's even tech people who are like, oh, tech is
bad. I mean, AI is the new climate
change. Yeah, exactly right.
So right. But the issue is, and actually
here's I think a point which is post libertarian, OK, if you.
I like this frontier of post libertarianism.
Which is accepting all the premise of libertarians and then
say what's next, right? So the moderated Internet like 1
thesis is. By the way, I want to come back
to China, but. Yeah, so one thesis is the
unmoderated Internet is a problem, not the Internet.
So the question is, what does it mean for a moderate Internet?
So China has a moderated Internet, right?
Because of that, they won't have millions of people cheering an
assassination or something like that.
They won't have drones being scripted on their soil, right?
Because they can just block an intraday at the firewall level.
They have this concept digital borders they actually think is
ahead of its time where they think they treat the digital as
being on par with a physical. And they're also insulated from
a lot of the chaos in the Western world because everybody
speaks Chinese. They're only listening to
Chinese stuff, and all that stuff is coming through
translation and most people aren't paying attention to it.
It's like seeing a war and everybody's yelling in Arabic
and you know you're not paying attention to in the same way.
Whereas the Ukraine war, people were yelling in English and
people were more empathetic to it, right?
So China's insulated from all the chaos of the world in many
ways by this border they've built.
And I think that is underestimated in terms of how
much stability it gives them. But the problem is that for the
Western mindset, they'll immediately say, well, I didn't
consent to that moderation given that we've just been through
four or five years where we had to fight for free speech in the
Western context, right? So I think that the thesis
antithesis, synthesis is consensual moderation, opt in to
a society because in the absence of moderation, you get American
anarchy. In the presence of non
consensual moderation you get Chinese control.
But the third concept, the Internet intermediate, is you
opt into constraints. Why doesn't choice work?
Why doesn't choice? That is what it this choice.
Is, yeah, but I mean. Like why is?
Why is, why isn't the American system necessarily anarchy in
the sense that like, like 'cause I, I can watch a conservative
media, I can watch a liberal media, I can watch an
independent media, I, I have choice.
And So what drives my orientation to aggregate?
What drives power accumulation in media when there's a
multiplicity of options? I'll give several.
So this is basically going to be like, this is the argument that
is going to be had for the next whatever number of years, right?
But let me give an argument as to why American anarchy won't be
desirable. The the very simple argument is
going to be the mass exodus of Americans from America.
Like that's already happening. It's, it's, you're seeing it in
Europe. It's happening first in Europe
because Europe and America are not like separate entities.
The G7 is all having sovereign debt crisis at the same time.
Lots of Brits have left Britain, so many French have left France
that they're trying to pass this Zuckman exit tax where it's
like, no, it's a wealth tax. Like it's a wealth tax more than
€2 million. You're taxed some crazy amount.
So essentially the more people leave, the more grabby the state
gets, which makes more people leave and it's a negative
feedback loop and and eventually everyone's going to get super
mad. This is when the original
feedback loop pops and and the reverse.
Happens yes and very few people understand the history of
communist societies like the reason the Berlin Wall was built
is that all of these people left communist East Germany for West
Germany and then eventually the East German government was
getting embarrassed by this or losing all their doctors and so
on and they said is. Mom Donnie going to build a New
York wall. A digital.
Version digital law. Why?
Because tax ex exactly. Exit tax.
That's absolutely going to come, right?
They've already passed something like or not passed.
They've proposed, if I get it right, there's there's some
referendum in California where if it passes in 2026, it was
proposed on some date in 2025 and every like you know 1 of 200
billionaires who is resident in the state and they have a list
right with the 200 billionaires who is resident in the state in
2025, they have to pay a 5% net worth.
Yeah, it's called the villain. Tax.
I read the one time tax. Right one time tax 2026.
But but here's the thing. It is designed.
First of all, it's a it's a very bad like it's, it's like this
crazy Iran villain kind of thing for several reasons.
First is it's evidently passed by a referendum in 2026 that's
binding on 2025 and. It's a constitutional amendment.
Right. And so if the price of that exit
tax is set on the price of the assets in the year 2025, but the
value of the assets drops in 2026, it could be 2030% of their
assets they have to liquidate. Now these are billionaires,
which means they're running big companies, which means that
there's an obligate liquidation event where at as soon as that
bill was proposed, these 200 offices of these, you know, guys
who are running major companies include ZOC and so on and so
forth, are asking, does ZOC need to let, I don't know what this
fortune is? Let's say it's 100 billion,
right? Does ZOC need to sell $5 billion
of Meta stock in order to have the cash on hand in case this
bill goes through next year? So almost with certainty, some
of those several 100 billionaires will have to do
mass liquidations of mass amounts of stock this year,
crashing the market, just in case that bill passes next year,
right? Tax the rich?
What do you mean? What's the problem?
Yeah, exactly. We're trying to.
Eat the rich doesn't bother me. I'm just so I'm all for it, you
know? Once it hits my number then I'll
pay attention, OK? But by the way, the equip tax in
the US is also set up supposedly only for the.
Rich, it was for the rich 1% and it's like would never hit me.
That's right. Now it's like 40% if you make 60
KA year. That's right.
And with inflation, everybody becomes a millionaire and then a
billionaire, right? Exactly so.
This is what I was saying. It's not miles and or meters in
kilometers, it's gallons and oz. Like what are we really talking
about? That's right.
So if we take if we take America and Europe and actually Japan as
one whole, all of them, the US, the UK, Italy, Germany, France,
Japan, they're all seeing yields soar like this as Chinese yields
are going down like this, right? And so that means people are
selling Treasuries, right? They're buying Chinese bonds,
they're buying gold, they're buying digital gold.
Yeah, exactly. That's right.
So that is the sun setting of the of of the American empire
basically, right. And and I think that.
OK, so let's be optimistic. OK, so, so our friends in this
administration, right, of which there are a lot of tech friends.
I I love these guys. Progressive, yes.
Working their asses off. Yes, optimistic, optimistic and
our friends in the private. Market, OK.
What? What?
What would they do? OK.
And what? So let's say you weren't
building network school network state activities, and you were
put in the seat and you had imperial authority.
Save the American Empire. Save the American Republic.
OK, so let's say. Without.
Without a revolution where everyone's like.
Totally, totally sorry. So let me give the preface that
we were asking you to do is be like Gorbachev or Yeltsin, OK?
So that's to say. This administration is willing
to take aggressive action. Fine, fine, fine.
So I. Take it all the way to the
Supreme Court every single time. So.
And here's. To ensure that they can take the
action. Here we go.
So a freedom cities, right? Establish basically there is
Trump has spoken about this establish bills where states can
designate special economic zones or a version of that, the
Americanized version, special Elon zones, right?
Not specifically for Elon, but could be a Palmer Luckey zone
for drones. It could be an Elon zone for
robots. It could be, you know, zone for
biotech, right? For alumina, for example, right?
All of these different zones, which once they're there,
remember the thing about having like states bring local funding
to them right? Now, once you've got a center of
excellence and let's say it's in Pittsburgh, OK?
Or let's say it's some RedState where the governor and so on are
friendly to you, right? We just saw one in Akron, OH.
Great. OK, so let let's say, let's say
it's Texas. OK, so Texas, you, you have, you
know, University of Texas and you have Texas State government
and you have quite a few entrepreneurs in Austin and so
on. And you have Starbase.
And so let's say it's a manufacturing zone, OK.
And you know Burning Man where there's just absolutely nothing
there, right? The less desirable the land is,
the more desirable the land is. The reason is because nobody
cares about no incumbency. Yeah, there's no incumbency.
No, you take drone shots of it, you show how completely barren
it was, Right? So then you fence it off, OK.
And then you essentially admit people into this fractal
frontier, and they're signing away a contract.
And basically, you have new regulations here.
There's no OSHA, there's no EPA, There's none of this stuff,
right? And you have to figure out what
pollution laws there are, what labor laws there are.
You have to have some sensible rules, right?
Necessarily deregulated is critical.
Exactly. Minimum necessary.
Finding a mechanism, but ultimately deregulated.
Yeah, so the key thing is to be clear, you're not going from
insane bureaucracy to total anarchy.
Instead, what you're saying is clearly these laws have been
abused, but clearly also there was some good intent at some
point behind them. So therefore how do we preserve
the spirit with the minimum necessary edits, Right?
And often the answer is to have it supervised by let's say Texas
State as opposed to the federal government.
Simply having regulatory competition works wonders.
This is actually one of the secrets of the Chinese system.
They have competition between states.
When the American system was working, it was a laboratory of
the states. You had federalism.
Once it became too centralized, as you point out, then that went
away, right? So really we're saying restore
the 10th Amendment, right? Bring back competition.
All rights, not reserves. The federal government go back
to the states, right? So 10th Amendment activists or
even more important than First or Second Amendment activists,
OK, right. So moreover, you're not going to
get resistance from the Democrats on this.
Why? Because they're doing the Blues
are doing soft secession, right? They've talked about this their
own. States.
That's right. So finally you've got an open
door where if you do think Blues are going to get back power,
which they probably may, it's at least partially right, You have
an open door where they're actually also agreeing on this,
where you can push through 10th of them and 10th of them and
establish facts on the ground. Like the moment you have
factories there, you have buildings there, you have a
regulatory authority that was granted to UT and to, you know,
local texts, entrepreneurs and scientists and so on.
And when they have authority that supersedes out of the
federal government, it's very hard for the next FDA or EPA to
come in and say you don't have that when it's in like 10
different places at once, right? You just smash the triforce into
pieces and you distribute it to the individual states, right?
This is the only thing I'd focus on.
Yeah, decentralization, right. And the reason is now you've got
a fighting chance why those freedom cities will attract
capital, they'll attract talent. They will be secure because they
can be either. See, the one issue is states
don't have secure borders, right?
Why? Because of all the illegal
aliens and so on and so forth. But on private property, even in
San Francisco, it is still allowed to, you know, for a
reason. You can't get a homeless drug
addict out of your, you know, like garage, like like your,
your door sill in a, in a, in a restaurant in San Francisco,
they can be like sleeping in your door sill.
But if they're at if they're inside an office building, at
least private property is respected in a certain way, even
if public property is not, right.
It's just an idiosyncrasy of where America is today, right?
It may turn out, by the way, that in blue states, that last
barrier falls right and they let the homeless squat because the.
Squatting laws. There's a lot of squatting laws.
Yeah, exactly. That's right.
So they just let the homeless squad in your garage.
They, you know, they, they, they let the legal aliens suicide,
right. So it's possible in blue states
just completely goes away. But in red states at least, you
start with the sacrosanct nature of private property and you
start having these things and you can do something where some
significant fraction of the equity, by the way, even 51%
like non voting stake or something like that goes to the
people of Texas or something along these lines.
So they're all getting a cut you could put on the blockchain so
they know exactly how much they're getting.
If it's like because you can micro allocate like 50 bucks or
what have you. So you make it rain for
individual Texans, right? Because if it's a billion
dollars, like what's the population in Texas?
It's like 30 million, I think something that's right, right.
So a billion dollars, that's actually, you know, that's
pretty good, right? If it's, if you're getting 100
bucks to every person in the state, if you're getting
jittering 3 billion a year from this, like it's actually kind of
amazing. Or I mean, do you really need to
if suddenly job growth, I mean, this is the economic forces,
Well, well. I, I think you do.
And the reason I think you do is I think it is surprising to me
how much people even having 100 bucks a Bitcoin gave them a
rooting interest in Bitcoin. It's like actually crazy how
much it really changed their kind of impression.
So if you have like everybody holding like a. 100 bucks so the
freedom cities. Freedom cities, 10th Amendment
special economic zones. Well, and the deregulation is
it's more than a small thing. It's actually if you want no
reindustrialization without deregulation.
Why? Because the problem is not like
the the difference between regulation and taxes very, very
important. Why or tariffs attacks is
continuous? By the way, can you pull up the
chart of Chinas nuclear cost versus the US?
Nuclear cost. Crazy thing, I think.
We should look at that. So that shows that like
basically. And this, this speaks to the,
the, the importance of D, right? Because I think ultimately the
most and, and everyone can argue all day with about solar, which
is fine, but put solar to the side.
The scalability of power production with nuclear is
extraordinary. If you can get speed up cost
down, which China has done. So they have I think 400 nuclear
reactor sites in construction right now.
You're trying to think about each one of those being one,
maybe 1 1/2 gigawatts. Suddenly that's 60%.
Of the US power production capacity being built right now
in just nuclear by China. Yep.
And then you add on the Gen. 4 systems, which they demonstrated
2 years ago, which are honestly engineering marvels.
They're incredible. This is like the graphite balls.
They're really in a cone, right? And it's helium gas that heats
up and so there's no meltdown risk.
It's totally safe. The graphite balls can't
overheat. I mean, nothing about it is it's
designed to be stable. It's designed to have like
everything breaks, no one's around, nothing happens.
And the efficiency to build it is like if you look at the raw
material cost, it's nothing. Like it's so little.
And then obviously they just put their first thorium molten salt
reactor into production into turn the power on this week.
Yeah, so and then and then they have been saying like reserves
in Thorium, right, like 10,000 years, 100,000 or 10 million
years, whatever the number is, it's insane.
There's a Saudi Arabia. Of thorium and they found a load
in China. So anyway, so the point is like
because they've enabled and unleashed.
This shows it's physically. Possible.
It's physically possible, and the raw material cost is a
fraction of what you're seeing here.
There's still a heavy regulatory cost here, but the exponential,
like the compounding effects of the regulatory processes in the
United States, is what's driven these.
Costs, absolutely. And that includes like
regulatory and labor laboratory and material laboratory,
regulatory and in sourcing, environmental, et cetera, none
of which, you know, on their own you could point to and say this
is fundamentally the problem. But like, let me ask you the
question. So now the federal government is
taking action. Our, our Trump administration
friends are taking action to say we want to take an active role
in driving these outcomes. So they're putting capital into
businesses. Capital doesn't matter.
And here's my argument. Like the entire thought that
this thing is capital limited is wrong.
And the reason it's threefold, first is regulation is like a 01
as to whether something is possible or not.
And you know, for example, like can you do your body your choice
in biomedicine? Like can somebody take a drug or
not? No, you have to go through this
entire FDA process that's multiple years.
That is not how Banting and Best developed insulin, for example,
right? Do the Wright brothers get FAA
approval before they flew? No, if they didn't exist.
Right. Like if you actually go back
and. Did Uber get a taxi cab
medallion? Yeah, exactly.
That's right. So, so this entire process of,
you know, regulatory, you know, Croft that's accumulated on
things. What you want is zones where you
can move at the speed of physics, not permits.
And then you just have somebody exercise their judgement in that
area and and you, you have a large quote, I don't know, blast
radius if you want. I mean, for the most part,
nothing is going to go wrong in the sense I should say nothing
will go wrong. Let me clarify that.
There will be risks. Lots of things will go wrong,
right? Because just when you're
pioneering, things will go wrong.
But everybody in the zone takes those risks, right?
No plane crashes, no planes, no train crashes, no trains.
And if there weren't any, you know, like large effect size
drugs, there'd be no side effects, right?
So these zones are the risk tolerance zones, the frontier
zones, the fractal frontier, bring it back to the earlier
piece, right? And the deregulation is there,
like as an example, the NSF acceptable Use policy.
You know what that is? Acceptable use policy?
I don't know. This is actually one of the most
important acts of deregulation ever.
Why? Here's why.
Until 1991 or 199991, the National Science Foundation had
an acceptable use policy that only allowed use of the Internet
for academic and military and educational use.
Right. Because remember, it was
developed as the interim was developed as something that get
hit by a nuke and still survive, right?
And it was like an educational network between universities and
stuff like that. And there's this debate as to
whether to allow commercial traffic.
And they said, no, if we allow commercial traffic, it'll be
malware and spams and scams and porn and so on and so forth.
And of course they were right. They didn't get all of that.
But basically with the fall of communism also was the rise of
Internet capitalism in that year.
In that period, you had the repeal of the acceptable use
policy and the legalization of commercial Internet traffic,
which beganthe.com era, right, which led to the last 30
something years. So that's a great example of a
01. No amount of capital would have
solved a ban, right? Another example is, in a sense,
what was just holding back China was regulation in the sense of
the death penalty for capitalism.
Like pre Deng Xiaoping, you'd get executed for practicing
capitalism, right? So all the focus on tariffs and
taxes, the reason I think that's wrong in my view, tariffs,
taxes, capital is wrong because that's just a percentage like
for, you know, if I'm selling a widget for 100 bucks, you know,
maybe lower taxes, it goes from a 10% to 5%.
That's an optimization on the margin or, or even a tariff.
Okay, maybe I get a little bit more of the market and I get,
you know, a 10% bump in my revenue, maybe if all goes and,
and that tariff has to be there for a long time and so on,
right? So tariffs and taxes and even
capital. The problem is the cost of
building things in the US is this graph shows as lost where
things go. It's not like 10% more than
China. It's like 100X more than China.
It's 100 X slower than China. The reason for all that is all
kinds of labyrinthine process in bureaucracy that you just have
to be able to scrap totally and look at exactly how just another
part about it is. And this is the hardest part,
honestly. Humility, like in the sense of
China's better in many ways in the physical world.
America can and should learn to copy China in a way of
recognizing they're ahead in there in many areas, right?
And you know, what's funny is actually in many of these last
10 years were implicitly about copying China.
You know why the Democrats tried to blink, censorship and so on
and so forth. The Republicans have tried to
implement industrialization, both of being obsessed with
Taiwan in many ways. It's sort of like, you know,
they've trying to be out China, China, but it's like a bad fit
on top of like the American chassis, you know, right.
One thing I hear a lot is China wants to beat or destroy
America. I don't think that's true what I
think, but but let me give a macro on why people think it's
true, right? So the V1 is essentially people
thinking that China is still Maoist, right?
Maoist Maoism was a particularly insane variety of communism.
It was like psycho even relative to Marxist Leninism, right?
This was like the agrarian, eat your eyeballs most psycho
version of communism, and it led to the Cambodia kill everybody
with glasses kind of stuff or whatever, right?
And then when Deng Xiaoping took over in 1978, he actually it was
basically a coup, OK? Because Mao's wife and the Gang
of Four and Mao's inherited successor, he basically put them
on trial, right? Because it was similar
culturally. The end of the Cultural
Revolution was similar to the end of openness.
Everybody was just tired of 10 years of absolute chaos and
pandemonium. And they're like, let's just
make money, right? Like, Cap, you know, we've done
this communism thing forever. The the issue is this.
Neither the communists nor the far left or the leftist in
America, nor the American right wants to admit that was a coup.
You know why? Because the Communist Party in
China wants to say the Communist Party is continuously reigned
over China. They don't want to say Deng
Xiaoping was a coup, OK? The American leftists want to
say China's still communist because they're taken in by
words and symbols, right? So they just see the hammer and
sickler like they must be communist.
Yay, Comrade writes. They want to claim them as their
guys, right? And the American right wants to,
you know, they only see the thing communist.
And they're like, you know, these are, you know, they've
been inculcated to think the label is always the same thing
as what it says, right? In many ways, China is
nationalist, but they call it communist.
One way of seeing that very clearly.
Mao had this whole campaign against the four olds, right?
Like, among other things, like filial piety, like all the
pillars of traditional Chinese society were supposed to smash
them and so on and so forth. And GI is all about the great
rejuvenation of the Chinese nation, 5000 years of Chinese
tradition and so on and so forth.
You're supposed to exalt. This is essentially without
saying it. He is the, this is the new
Chinese emperor, right, Right. And so they still keep the label
communism. Actually, you know, on a
website, we can do a front end change or we can do a back end
change, right? A front end change is very
visible to everybody. A back end change.
You keep the front end, but the back end is completely changed.
China did a back end change intentionally so that when you
swap from, you know, some weird thing over here to Django, to
Rust, you don't have to change the website at all.
It can be completely. It just everything just speeds
up and moves faster. So I think the the issue with
this is that because the Communists, the Democrats and
the Republicans all for different reasons, want to
maintain that China is still Maoist, right?
It is very hard for people to see clearly that that was
actually a total disjunction in Chinese history.
This is also, you know, some of the naive things people say is
like, oh, the Chinese think in centuries.
They definitely don't, right? Like the last 100 years was
total chaos in China, right? Chinese people are human just
like anybody else. But once it got really great
leadership in the form of Dung, who basically set up the current
system, they just went on this complete explosion.
It's actually crazy, by the way, because he was like 78 years old
when he took over in his own way.
You know, Trump is very energetic late in life.
Like for Deng to be able to run China and do a turn around of
China from what it was from 78 to 92, He's actually crazy.
Crazy, right? Yeah, But coming back up.
So so that's that's my the reason I.
What's the what's the motivation today?
What's the motivation today? The.
CCP Yeah. Oh.
Yeah, what's the motivation? So they've got their five year
plan. Yeah, they what are what do what
is the West? What is the American left and
right? Where?
Are they getting wrong? About have right and wrong about
the mindset of China and you know, the the the, the, the the
the Dissidity's trap question yes, like how much do we really
have a trap? And it's a great.
All this is great. So, you know, and how much of
this is illusory? Yes, OK, great.
So there there's a guy in Asia Times named Han Fazy, who I find
a very insightful writer. He's a little bit of a troll,
but he's actually very numerical in a way that's unusual among
Western columnists. This is one of the biggest
things about good Chinese writers, how numerical they are
like a good tech guy. You know how like the good
updates which we get from data. That's right.
I think you and I are very numerical, like charts, graphs,
you know, we calibrate in this way.
And our founders who give us good updates have numbers, not
just letters, right? You need both.
But give me the empiricism, I'll tell the story.
Yeah, exactly. That's right.
So Han Faizi in Asia Times had a good concept a while back, like
a few months ago, which is basically that in a kind of
compliments that I'll add to one idea of my own right, he
essentially said China executed so fast that it went from being
a threatening challenger to just totally dominant.
So it obviated the city strap by just rapid execution and it's
announced cranking like 300 X number of ships the US has.
It's got so many ships, so many planes, and so it's like it's.
Adding It's adding five terawatts of power when we're
adding one. Exactly.
Yeah, that's right. And.
It's accelerating. It's accelerating, right?
So you only have a war when both sides think they're going to
win, right? And Hegseth, for example, is
actually quite a smart guy. So on the Sean Ryan podcast last
year he showed he was aware the Chinese hypersonics could sink
every US aircraft there in the 1st 20 minutes, right?
And other people have said similar things, like the
Pentagon Govini study showed that the Tomahawks and J dams
are made in China. There is no war with China.
It's basically all fake.
All the military spending is basically, you know, the
Raytheon CEO said you can't decouple from China.
The secretary of the Navy said China's one shipyard makes more
than all American shipyards combined.
I mean, the entire concept of there being a military economy
that's distinct from the consumer economy comes from
Hollywood movies. But it's wrong, right?
The military economy is a subset of the consumer economy.
If you can crank out lots and lots of cars, then you can
repurpose that to crank out tanks, right?
So China has like, you can't fight your factory, right?
And even people who think it's like a high tech competition on
AI, China is at least at a tie if not more on AI.
Yeah, I mean, what I, what I hear is that they'll they'll be
allowed to publish papers. And I see this in science
because I've tracked a bunch of different disciplines, but like
they're always publishing right before us, right?
And then they don't publish beyond that.
There were some papers that were published that were, they were
very far ahead. I won't mention what they were
I. Think and they stopped
publishing. And they stopped.
Publishing. Yeah, yeah, yeah, probably.
So they get turned off. So basically it sound what I
heard was like, you know, the the party saw party leadership
saw that they were getting too far ahead.
Whoever is monitoring this said you're you're publishing too far
ahead. You have to stop publishing.
Yeah. So because the individuals.
Are very smart. Because the scientists, I think
in China still very much want to have their, their, their, their
knowledge on an international stage.
They want to be individually recognized for their work.
They are prideful scientists. They, they want to have an
impact on humanity and the grander scheme.
And they don't just think about the United States, they think
about the world. And as a result, they want to
put stuff out there. However, the risk is tipping the
United States off on how far ahead they are in some
disciplines, which is rather substantive.
Yes, that's right. And basically, I mean that is
the trade off in China. The collective does take
presence of the individual, and there's a leftist version of
that which is bad, but there's a nationalist version of that
which is at least arguably good, right, In the sense of, I think
up until, let's say up until you get to the 90th percentile,
China is a good life for most, most Chinese people.
However, once you get to the 90th or 99th percentile, now
you're surveilled and tracked and so on, right?
So China is the best for the most, but the Internet is the
most for the best, right? So let's say once you get really
good, you're Jack Ma or you're somebody like that, then you
need to get out of China or you need to be like yes or no Sir, 3
bags full star on everything that the party says and does,
right? So it's a, it's an interesting
kind of trade off where up to like, let's say upper middle
class or something like that. You know, you have instant
delivery of everything. There's no crime.
The Chinese cities are glowing at night.
There's books, literature, whatever you want.
Everything is there. And, and people for the most
part, by the way, the way that like kind of the censorship in
China works is you can for the most part say what you want.
What you can't do is you can't like, organize groups like, like
to block a bridge, for example, like they do in the US or to,
you know, throw stones and so on and so forth.
And the party actually takes all of that feedback and they use it
to try to like, if they see a lot of anger on something, they
might censor it, but they take that as feedback and they use
that to try to, like, cut it off later, right?
I'm not saying they're good. I'm just saying they're very
effective at what they do and but but I want to I want to
address 1 of the your other. I just want to know the mind is
the mindset we need to destroy the United States.
No. And do we need to, we need to
beat the United States well versus we just need to be self
stable? I I think that in 2025 it may
actually have gotten to they do need to beat the United States.
But let me explain what I think the history was just and again,
I'm only making I'm only coming to this from 10 plus years.
What I do is I read Russian news and translation.
I read Indian news, I read Chinese news and translation
because I feel that that gives me more signal than just reading
WSJ, New York Times, right? So, and in fact, I don't even
like X plus Weibo, which is like Chinese Twitter and a few other
things. You start to actually get a map
of the world where you're seeing lots of events, by the way, that
other people aren't even talking about, right?
OK, fine. So here's my rough narrative of
how China sees it. And of course, China's a huge
place with a billion people, and people have different views.
But let's say let's call it the center of mass.
Perhaps for about 37 years, from 1978 to 2015, China grinded in
factories while Americans were watching Friends in the 90s,
right? And so at every step there, you
know how, like, a great founder will give up some degree of
money to preserve control. China would always preserve
sovereignty, even if it may taking worse economic terms,
right? And so they would just do the,
the, you know, the tougher jobs, the more polluting jobs they
took, the pollution they grinded, grinded, grinded,
grinded for for generations, decades.
And then the they kept executing.
A huge break for them was after 2001 with 911 then like all the
eyes went off China and just to the Middle East and China had
years to just kind of grow and just stay out of all of the
Middle East stuff and Iraq and all that crazy stuff, right?
And then only by 2015. So there's a critical moment.
There's a, there's an important graph, important paragraphs that
we could show you here. This was U.S. media revenue and
they were doing great. And then Democrats, which is
basically media, it's a big part of it was they were disrupted by
the rise of the Internet on Facebook, right?
And so this happened right after the financial crisis.
And so we just, I mean, a 75% ish drop in like just a few
years. That really hurt them.
And they blamed us for that, right?
OK, so the Internet disrupted, let's call it blue America or
Democrats at almost exactly the same time, China over here, you
see China rise and disrupt Republicans.
Yeah, manufacturing, right? So in 2010 basically you realize
it's A4 front conflict. Right.
And this was unlocked in the early 90s with admittance to the
WTO and yes and trade freed up. But really?
The main thing about it is we have to remember also, and this
is not people don't are forgetting these parts of it.
China there's there's a strategy to admitting China which was
like George HW Bush put all these listening posts in
Western. This is now being revealed.
One of the reasons that George HW Bush didn't go harder on
Tiananmen is because the US was using Chinese listening posts to
listen and eavesdrop on the Soviet Union, right?
And so they had all that huge border that they have with the
Soviets. They could get all the signals
intelligence from there. And so China was a military ally
against the Soviets, right, which were a much bigger threat.
And they were just making widgets and so on.
So, you know, the leadership at that time wasn't dumb.
They were just triaging and prioritizing like turning China
from an enemy and a nuclear armed enemy at that into if not
an ally, at least somebody who's making widgets and at least
fighting your enemy's enemy is not a dumb move, right Then then
they leave it to later leadership to figure out the
next competitive move, right? And so, and moreover, actually
in the 90s, the premise was that many Americans are going to be
trained to administer Russia and China as like the next Germany
and Japan, the next provinces of empire.
And this was a reasonable guess at the time because Russia was
part of the G8 and China was sending its best to America.
And even these like, you know, outlying countries, it seemed
like the entire world was under American empire, right?
And but then what happened was like, all these things kind of
came undone because China executed so well, right?
And Internet executed so well. And they're both actually
invisible to Americans. You know why?
Because Internet is literally invisible.
It's intangible. And China's overseas.
So like the cognition of these things even existing, it's not
like you can look around and see it happening, right?
It's happening either overseas or in the cloud, right?
OK, so my narrative is that the rise of China that basically
disrupted Republicans, the rise of the Internet disrupted
Democrats, and with the rise of China disrupting.
So let's take Internet disrupting Democrats led to the
tech lash against the Internet and it led to wokeness against
the Republicans. China disrupting the Republicans
led to trade war against China and Trump against the Democrats.
OK. Like you can make a diagram of
that, right? So that's like a more
explanatory model to me of the last 10 or 15 years.
Or so wait, explain the wokeness against the Republicans.
Because what's the power structure that because the the
whole like origin of wokeness is demolishing power structure.
For me, it always felt like one of these emergent things, not
necessarily intentional things. It's very intentional.
This graph shows that starting in 2013 all these phrases like
toxic. Yeah, I've seen this.
Yeah, right. Yeah.
These all went vertical in NYT in 2013, right?
Contrast to phrases like Amazon, right?
These are like control phrases where you can see them just kind
of going up organically on their own, right?
You know, or like, you know, radios going down, right?
These are like control phrases, but you can see an editorial
decision was made because in your time, stock price was down.
Remember, like post financial crisis, they almost got sold.
Washington Post did get sold, right?
So their stock price was down. And an editorial decision was
made after seeing the success of Gawker and these other blogs, to
just pour the most inflammatory words and narrow it as possible
into the water supply. Part of this was also the Obama
re election in 2012. The economy was still weak and
he couldn't really say that he'd repaired the economy.
So that's when Proto Wokeness really got underway.
He pushed the race and gender buttons extremely hard during
the campaign and that got the whole thing heated up right and
and 1/3. The 2012 RE election.
The 2012 re election, right? So he pushed those buttons much
harder in 2012 than he had in 2008, partly because he couldn't
run fully on the economic record.
A third piece of it was Occupy Wall Street was, you know,
pushing on economics and there are various, you know, center
leftists who didn't want economics be the focus.
So it's like, OK, just go and do the race and gender and so on
and stuff, right. So let's say these three things
like the, let's call it the sort of cynical center left, the New
York Times and Obama, of course, the roots of all going to go
even deeper. And there's all kinds of things
going back to the 60s. And you can trace it back many,
many, many decades. Of course you can trace it back.
But let's say the immediate kind of thing is this editorial
decision over here. And the the key thing about it
from my standpoint is, you know, that's saying like go woke, go
broke. But there's actually an
alternative phrasing. And this is I think John Stokes
is going into others go broke, go woke.
Why? Gone broke?
Go woke. Because once you're once once
these organizations were going were so, so, so financially.
Do you think it was the organizations?
Because it feels to me like just again, there's the.
Bottom of aspect of it too. Yeah, there there's like this
economic, like messiness that was happening that at that
point, where do you go or what do you blame?
Because, you know, you've got a continuing presidency.
Yeah. And so you start to recognize
again, maybe at the end of an empire, this idea that there's,
well, you, you create synthetic power structures, I mean, that
rationalize the circumstances that you find yourself in
without actually looking at the real circumstance, which is it
was. So insane.
We organized the system to suck up all the capital and
inefficiently blow it everywhere, and that's what
happened. The whole.
BLM thing after eight years of a black president, you know, it
was something where it was just, it was essentially meant to be
like, what's the right way of putting this?
That was that's something where the left, when it was under
threat, was going back to its old it.
It was its own MAGA, right. Let me explain what I mean by
that. Yeah.
The civil rights movement, these were its glory days.
Yeah. When we were we fought for a
cause. Yeah, man, you know, that was
their, like, great moment, right?
World War 2, when they're fighting Nazis, is also a moral
cause for the right. If it's always, I mean you
always identify an oppressor, the you know, the, the, the,
the, the invisible but now manifest reality of the system.
That's, you know, broken, which is the reason we can't progress,
right, Because I think we're wages stagnant around that time
as well. Well.
I mean, inflation has also been crushing wages for a long time.
I mean, I mean, I mean real, real, real wage.
Growth, it really, it really went the, the stagnation or the,
the devaluation. Really got underway.
That's the moment when socialism takes off, which is yeah.
So that's my I have a theory on this.
My theory is like every human needs to progress by 10% a year.
We know what we don't have. Like that's what makes us
unique. We have these like abstract
concepts That's there's things in the world that I see and I
don't have it. And so my observation sets my
understanding of what I am, what I have.
So that's where desire comes from.
And so the human only feels satisfied and happy if they're
getting the things they don't have by some amount every year.
Have you seen this graph? Amazing, amazing, amazing chart.
Price of soup, yeah. Here's why.
There's relatively few products which are like consistent over
more than 100 years, right? Because you know, and the same
manufacturers being in business, they're manufacturing of scale.
This is the true chart, maybe the single best chart of
inflation. Yeah, Oh look, we went off the
gold standard. Yeah, right.
Exactly. So you can see it here, right?
There it is. So this is the true devaluation
of the. Dollar no, but I so so this is
the underlying right. So we we made these decisions to
grow the government, grow government spending in order to
give people more stuff. As a result, the only way to
keep doing that is get off the gold standard Fiat print and
that's where we ended up causing stagnant wage growth, stagnant
purchasing power, etcetera, or declining purchasing power and
stagnant wage growth. On the housing, education and
healthcare, yeah, those three areas, if you've seen the graph
that shows that we could put it on the screen, but those are
three things which are soared in price.
Well, everything that. Technology, the technology like
that that doesn't have the government spending.
Well, that's right, exactly. So the things that.
Are when the government spends, there's no market force.
There's no, there's no choice to not buy something if it gets too
expensive. So as a result, it, it naturally
gets more expensive every year and the government just says,
OK, I'll pay more, I'll pay, I'll pay, I'll pay more.
Oh, we need bigger budget. Oh, we need bigger budget.
Yes, because the government cannot say no.
They're not an actual willing buyer.
They're an unwilling buyer that will pay anything at any price
because they're mandated to buy the thing.
That's right, but. But just to go back to like the
point that I think is really important, like so, so as this
happens, the cost of everything goes up, the purchasing power
for everyone goes down. And I think what makes a human
happy. There was a study in Jonathan
Heights first book or one of his earlier books that he did called
happiness Hypothesis, where he showed a psychosocial survey
data on happiness as a function of income.
And like at the time, it improved up to $60,000 of income
a year. Then it flatlined beyond that.
And then the the key measure of happiness was income change year
over year. So the more your income changes
from one year to the next, the happier you are, right?
And you can think about like, you win the lottery, you're
thrilled that's the best year of your life.
Next year you didn't win the lottery.
Even though you have $40 million in the bank, you're not as happy
as you were the year you won the lottery, right?
So when your income changes, when your purchasing power
changes, when you now have more than you had last year, you're
happy. If you have the same as you had
last year, you start to get a little distressed.
And if you have less than you had last year in purchasing
power, you're unhappy. And that's when I think you
create the construct in your mind of the system and you try
and define the system that keeps us.
And that's where there's this opening for the oppressor,
oppressed narrative to start to take hold.
Absolutely. And and I think you know my
framing on that or my phrases, rather than like first world and
3rd world, I talk about the ascending world and the
descending world. Yeah, right.
So the Brooklyn woke is from the descending world.
They were born rich, but they feel themselves becoming poor.
No and and they were the first generation in American history
to move out of a middle class house and then have negative
capital. They end up in a in a rent
situation with four, you know, 440 million Americans graduate
in the last 10 years from student from college with
student loan average student loan debt four $40,000.
So 40 million Americans with 4000.
Is that is that? Right.
Yeah, that might be a median number, but it's a pretty
substantive number. And so 40 million, four million
a year, 10 years. And so you add that number up
and then you look at the cost of rent and then you look at wages
in New York City and you're like, OK, rent has gone up,
wages have stayed flat and now you're graduating.
And most of those kids came from a middle class family where they
had positive assets. The parents owned the house.
Now the kids that voted for Mandani cannot buy a home.
They do not see a path to being able to do that.
They're stuck with these student loans and they don't know like
where they're going to go in life.
That's right. And that's when the the press or
repressed narrative resonates emotionally, and that's when
this kind of socialist manifesto can win.
That's right. And I think basically the issue
with this is it is, you know, there's, there's a graph that I
think Americans pull back from values.
Yeah. Right, exactly.
Religion, children, community. Only thing that's up is my
interest. Very individualist, right?
Yeah, by the way, this is all linked to progress like that 10%
improvement in life every year, as I meant like the more you can
cause as soon as you don't have that, all the values that you
held true, you no longer believe in.
Rule got you here. What use was the rule?
That's right. OK, so this graph has three
different charts. This is showing the yield spikes
in the US, Germany, Japan, UK, Italy, France.
At the same time this is showing yield dropping in China.
But this one is 1, which shows that the blue American and red
American are genuinely descending world, but they
they're not calibrated on why essentially for thousands of
years the center. Can you see that from there?
OK, for thousands of years, the center of the global economy in
the sense of the weighted average, right?
So not literally in Kazakhstan, but like the weight average of
China plus India plus the Middle East, Europe, the weighted
average was basically in the center of Eurasia because there
was rough military economic parity across the EUR Asian
supercontinent. OK.
That's why Marco Polo sought a China.
That's why Columbus risked his life to get to India.
That's why the Mongols and the Huns at various times could
defeat Europeans. That's why, you know, like the
the, you know, Spain was taken by, you know, folks in the
Middle East and so on and so forth, right?
And so there's something where it wasn't that Europe was
completely dominant. They were, they were one major
power and they weren't unified at all times, obviously, right?
OK, so with the infant of the industrial Revolution, Europeans
got so far ahead that the world economy rocketed out there.
And then with 19/13/1940, they blew each other up with World
War One and World War 2 with all these new gizmos they had.
And when the dust settled, everybody else had been they
were under socialism, they're under communism.
Japan had been nuked, Eastern Europe was in ruins.
The entire European continent was just bombshells, everything
flying, right? And the US was basically
unscathed relatively. And so the world economy was
essentially balanced between North America and Western
Europe, right? And so this was peak America,
peak westernization, peak centralization of all time and
all of history. But this is seen as by
Americans, the way things are supposed to be.
That's why it's the post war. This is treated as the year
01945, right? The beginning of American
empire, whatever you want to call it, right and so everything
is calibrated on that as the baseline.
It has how things were speed. But.
And people say, oh, around that time, you know, somebody without
a high school degree, they could have a home and they could have
a wife and kids and you know that was a good thing for the
working man but they're not calibrated on.
Is that the, you know, Chinese guy or the Polish guy who is
just as smart or smarter or hard working was artificially being
restricted from the global market by communism, by, you
know, various ideologies, Right. OK.
Once the Cold War ended in 1991, you see the rubber bands snap
back to Asia very, very fast because China is no longer a
communist, Eastern Europe is no longer a communist, India is no
longer a socialist, it's liberalized.
Russia is no longer a communist, not to the same extent,
Southeast Asia is liberalized, etcetera, etcetera.
Everybody is now actually competing on the global stage.
And for a while, this seems to be, you know, a win, win for
everybody. And in many ways it is.
But the problem is that this is a huge shift in relative power.
And here's where the the problem starts.
Dollar inflation, because is, is global taxation, because when
the US is printing a dollar, it is distributing that inflation
across billions of people, not just 300 million Americans that
required to have the dollar. They need to be global, number
one, if they're declining in relative power, they're no
longer global #1 whereas if they were, if America was just
exporting chocolates or, or even cars, it could have a gradual
decline to #2 instead, it has to fight like heck to be #1 And
this is actually the underlying logic of, you know, like any
company, if you're not growing, you're dying, right?
So the American empire has to from like kind of the metal
logic, you know, an Ant doesn't have intelligence, but an Ant
colony does, right? The empire has to start a fight
with Russia, start a fight with China again, right?
That's right. It has to expand.
If it doesn't expand, OK, fine. But the problem is and getting
back to the the city, the cities trap, it has lost that fight
with Russia in the sense of all of NATO cannot impose military
terms in Russia. Just the fact that Russia's
fought this thing to a standstill.
Maybe with the Pragoshan thing, it could have gone another way,
but the fact that Russia is being essentially supported by
China, Russia's just going to grind this out and Russia needs
it more. So it's very clear, I think,
what the long term outcome is, even if it hasn't been priced
in. Moreover, the, the to the, the
city's trap, arguably Russia, Ukraine was the big China US
war, but by proxy, right? And so it's done by proxy where
China supplies one side, the US supplies the other side, they
slug it out, and the Russians are basically winning.
Otherwise there wouldn't be peace talks like there would
just be dictating terms, right? There's only talks if you can't
dictate terms. the US is not strong enough to dictate terms
to Russia on the battlefield or strong enough to dictate terms
to China industrially. And so the issue here is that
that means you have a descending world like the blue American,
red American who are calibrated on being all time high, your
lottery winning kind of thing, right?
They're calibrated in 1950. But you can only go down from
there, right? And so, so because of that,
that's like this, you know, we, we start to understand the
perspective of the Russian after the end of the Cold War.
Right, right. They just felt this huge psychic
loss and status, and many of them discovered new identities.
This is the biggest thing, by the way, the Soviets, some of
them became, some of them were Estonians.
They had a new identity, Estonian nationalism, right?
Some of them like Sergey Brin's, you know, parents or Vitalik's
parents, they went overseas. They identified as
mathematicians first and foremost, not like Russians or
what have you, right? Some of them obviously stayed in
Russia. Some of them became like, you
know, they were Ukrainian, some identified as Christian,
Orthodox Christian. They rebuilt the church.
Many just had a total identity crisis because they're atheists
and they didn't have any meaning and so and so forth.
So they drank and drugged themselves, you know, right.
And there are all kinds of crazy wars after the Soviet Union
ended. And so that question is what's
being litigated right now today on on X at ever increasing
volume of like who is an American is like who is the
Soviet? Yes, it's like a constructed
softer category and it's even more artificial than the Soviet
category. Soviets you could at least come
back to Russian and Russians were 50.
That's in our piece, you know, the ethnic piece of the end of
the Soviet Union. So we know the economic piece,
right? Obviously communism didn't work
and you know, like eventually the planned economy failed.
All true. But the ethnic piece is that in
8/19/89 there's a survey that showed that the Russian ethnic
group had gone down to 51%. And so the Russians were like,
wait a second, we're supposed to be predominant in the Soviet
Union and long pent up nationalisms were fighting with
each other because, you know, like the Poles or the Estonians,
they all felt legitimately oppressed by the Russians.
But the Russians felt we're carrying the weight of the whole
union, right? We're the main guys.
We we're the ones who bled the most, you know, and we're paying
for the union. So both parties felt oppressed
by the other. Yeltsin was on the side of
Russian nationalism, Estonians instead of Estonian nationalism,
Poles, you know, like everybody was in in for their own tribal
nationalism. The whole thing came apart.
This is what's happening in America now where double digit
percentages of the population, some percentage of people hate
white people, some hate men, some are mad at Jewish people,
some are mad at, and some are mad at, you know, XY, like no
matter what, somebody hates you in America, unfortunately,
right? And so when you Add all that up,
that is very similar to where the Soviet Union was before the
very end. And the one thing that's keeping
the whole thing together is the reserve currency.
But that's going away very fast. You've seen the dollar graphs
and so on. So because of all that, I think
be ready for the reboot. Like, I think what's going to
happen after the dollar ends is the Democrats are going to side
with Chinese communists and the Republicans are going to become
Bitcoin maximalist. And that's why I think it, it
comes next. But I think one other piece I'll
say a very big thing that is going to become a thing in the
future is people are going to be mad at those who leave.
They're going to say something like stay and fight you coward,
right? And but the issue with this is,
you know, I'll, I'll give a one line of response and more
because Calacanis and I, Jason and I have kind of talked about
this. So like, did the Irish Americans
betray Ireland by leaving Ireland?
Should they have stayed in Ireland?
It's actually more people of Irish descent outside Ireland,
right? Didn't really betray Ireland.
What would that even mean? The potato famine, other things,
things were breaking up. Obviously some Irish stayed
back. Why didn't they stay back,
right? And the actual answer was those
people at that place in that time did not feel that they
actually were empowered to cause anything positive politically
there. So they left.
The Puritans who came to the Massachusetts colony, they left,
right, because they felt, you know what, let me make make a
better life abroad, right? The Germans who came from the
revolutions of 1848, they felt better life abroad.
And then more recently, obviously, Jews coming from the
Holocaust, you have the Persians who fled the, you know, Iranian
revolution, Yeah, Chinese and Koreans and Vietnamese who fled
communism. Indians were really oppressed by
socialism and Indira Gandhi and and, and Emergency and so and so
forth. This stories that Americans
don't actually know and obviously they're all the
dysfunctional governments in Latin America and South America
like, you know, Castro and that's story that many Americans
do know but Venezuela, that's right, Venezuela.
So the point being these people like Russians, Chinese, they're
not dumb people. Like look at look at, you know,
they're pretty good at math and they've got a, you know, great
civilization at various times in history.
But they were hit by this mind virus of communism.
Their studies melted down and their many of their best left
and many others were stuck. And the ones who were stuck were
mad at those who left. But stay and fight.
What exactly does it mean? Because stay and fight who?
Oh, stay and fight another American for America.
That's what they mean by it. Stay and fight with whom?
Because a lot of them are also saying, tech guy, get out.
They're saying, you know, like Indians, we don't want you
anymore or whatever, right? So we don't, we don't want you.
Yeah, tech guy, if you over contribute, I'm going to
penalize you. Yeah, exactly.
That's right. So on the one hand, they'll be
mad for you for leaving. The other hand they're literally
putting a thing saying tech guy get out right then stay in fight
for what? Right, because.
Like it's just something where they're mad about the past going
away, but they don't actually have a positive vision of the
future where you're on equal terms with them and so on and so
forth. And finally see and fight How?
Well, because staying actually is surrendering.
Why? Because if you stay in
California, you're subsidizing it.
Yeah, right. And so leaving is actually
fighting, right. So anyway, so that's how I how I
think about it. Getting, getting these zones
going, getting these freedom cities going, getting these
special Elon zones going. I think that's that's a positive
vision. Yeah.
We want to work on, yeah. Well, I'm sure people in the
administration will listen, OK, and try great.
I do think it's important to try and I do think like, look, I
mean, America was designed to have mechanisms of self
correction. I think we've talked a lot about
the grand cycles and all of those mechanisms are another
effort at a cycle that we've seen many times before.
But I do think that there's a significant will and I do
believe deeply in the notion of agency, but it requires
collective agency and there's collective forces that have very
disparate views on what their agency is intentional intending
to do. And that may ultimately lead to
not being able to get out of the cycle fundamentally, but.
I, I, I will say this, you know, there's, there's a, there's a
lot of amazing Americans, There's a lot of amazing
strength in the American spirit. And a big part of that is being
able to reboot from scratch. The whole thing, what was
America, it was the startup country.
The whole thing was about being able to do it from scratch,
right? Being able to reboot from
scratch. I just don't know if the average
if the majority of Americans feel that or remember that.
Maybe so, but at least some do and those can found freedom
cities and special economic zones and startup cities.
And crucially, that's, you know, that's often portrayed as Oh my
God, it's for the rich. It's not for the rich.
It's actually something where it's for the builders.
That's. Right, right.
OK, great. Thanks for having me.
It's been great to visit. Boom.
And Congrats on everything you've built.