In short
David Friedberg argues America’s affordability crisis and “socialist wave” stem from policy choices that let capital compound for the wealthy while blocking most people from owning assets. He proposes a “1-hour plan” centered on flipping Social Security and pensions into broad-based equity ownership (a 401k-for-all model), plus tax reforms and major reforms to education, healthcare, and housing.
Guest/host
The episode is hosted by Brett (Sorcery). David Friedberg is the main guest; he’s described as “the Sultan of Science.” Backgrounds mentioned: he says he graduated college with $19,000 debt, paid it off, and succeeded without “silver spoon” advantages.
Key claims
Social Security Trust Fund assets were effectively invested in a 3.5% treasury bond since 1982 and are being spent; if invested in the S&P 500, it would be ~$37T larger. Capital gains should be ~40% (not 15–20%), and labor should be taxed less. Education/healthcare/housing became unaffordable due to government-driven pricing and incentives.
Notable examples
California “functionally bankrupt” budget/pension cliff; 45 million recent college grads with student loan debt; student loan program enabling unlimited borrowing; defined-benefit pensions declining (private pensions from ~40% in 1980 to <8% today). He cites “Project Hail Mary”/“astrophage” as an analogy for socialism’s viral recruitment.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOThe Economic Crisis Overview
0:45 to 3:30
Friedberg highlights the impending bankruptcy of Social Security and current economic inequalities.
“45 million Americans graduated college in the last 10 years with student loan debt, can't afford a home, can't afford health care.”
California's Financial Instability
3:30 to 6:50
A discussion on California's budget shortfall and its implications for the state and nation.
“has run away from the majority of Americans.”
Compounding and Economic Policies
6:50 to 10:10
Friedberg explains how compounding effects and misguided policies have led to wealth inequality.
“Basically, labor should have always been taxed less than capital.”
Mistakes in Tax and Social Security Policy
10:10 to 14:00
Examining errors in tax policy and Social Security that have exacerbated economic issues for the majority.
“they need to have policies that drive the price of homes up every year.”
Concerns About Wealth Distribution Policies
14:00 to 15:17
Explore the potential pitfalls of wealth taxes and asset seizure in America.
“That's when anarchy and tyranny kind of ensue.”
The Dangers of Pension Plans and 401ks
15:17 to 17:41
Understand the shift from pension plans to 401ks and its impact on wealth.
“moment and say, number one, we recognize the state that we're in.”
Reforming Social Security and Retirement Accounts
17:41 to 19:55
Discuss the need for reform in social security to allow stock ownership.
“We can fix the policy where everyone's getting these what are called defined benefit programs, these pension plans in public governments.”
Critique of Political Theater and Socialism
21:22 to 27:53
Examine how politicians exploit socialist sentiments without solving real issues.
“Take money from them versus the majority of people.”
The Importance of Economic Mobility
28:00 to 30:01
Learn about the significance of economic mobility and how it can empower Americans.
“Worked, paid my debt off, succeeded in America.”
Reforming Social Security and Pension Plans
30:01 to 32:37
Discover proposals for transforming Social Security into a 401(k) style system.
“What socialism does is it puts a foot on everyone.”
Show all 23 chapters
Political Landscape and Economic Solutions
32:37 to 34:22
Examine the chaotic political environment and the need for effective leadership.
“And they're going to get bailed out somehow anyway.”
Addressing Failures in Policy
34:22 to 36:36
Understand the necessity for politicians to acknowledge past mistakes and propose fixes.
“Look, I mean, I'm here today to talk about this because I think it's important to have the open conversation.”
Taxation and Personal Accounts
36:36 to 39:27
Explore ideas on taxation reform and the management of personal accounts.
“The thing about the socialist movement is it's designed to be viral.”
Taxation and Personal Accounts
40:52 to 42:00
Explore ideas on taxation reform and the management of personal accounts.
“So Jeff Bezos' plan, what he thinks, what he proposes, is that the bottom 50%, they are around like$75 ,000 a year in salary, pay zero taxes.”
Critique of Government Involvement in Personal Finance
42:00 to 45:33
Discusses the drawbacks of government managing personal finances and taxes.
“why the hell are you putting it into the government?”
The Need for Tax Reform and Spending Cuts
45:33 to 49:28
Explores necessary tax reforms and the importance of reducing government spending.
“I think you solve 90 % of the problem in education.”
AI's Impact on Jobs and Economic Growth
49:28 to 53:06
Analyzes the historical context of job automation and the potential future with AI.
“And every time, every single time, they've said, but this time is different.”
The K-Shaped Economy and Wealth Disparity
53:06 to 56:01
Discusses the K-shaped economy and the growing wealth gap in society.
“Like Meta and others have this workforce training program now where they're like taking people that have never used software engineers and trying to help them.”
Understanding America's Challenges
56:01 to 57:44
Explore the root causes of current societal issues and the risks America faces.
“And I do not have enemies that I'm declaring.”
Political Accountability and Economic Issues
57:45 to 59:22
Discuss the political class's failures and their impact on economic stability.
“Well, they do say the first step to recovery is...”
Wealth Gap and Policy Impact
59:23 to 1:01:24
Analyze the wealth gap and its correlation with tax and spending policies.
“Google.com, Gemini.com, Gemini.google.com.”
Libertarianism and Social Responsibility
1:01:26 to 1:02:41
Examine the balance between libertarian ideals and societal needs.
“I'm like, at the end of the day, we do live in a society with other people.”
Making Americans Feel Good Again
1:02:42 to 1:03:44
Discuss the need for societal healing and a collective path forward.
“And we've got to try and make amends in this moment without letting it become a dark, shadowy fight.”
Transcript
Automatic transcript. May contain errors.0:00David Friedberg:He's known as the Sultan of Science. The Sultan of Science. The Sultan of Science himself, David. David. David Friedberg. David Friedberg. We have five years till Social Security is bankrupt. If you had put all the extra money that was put into Social Security since 1982 into the S &P 500, Social Security Trust Fund would have an extra$37 trillion in assets sitting in it today. The net worth of Americans is$183 trillion. The billionaires in America, their net worth is$8 trillion. The bottom 50 % of America, their net worth is$4 trillion. Capital gains tax should be 40%, not 15%. That would be a fair tax policy.
0:34David Friedberg:The key metric for America should be to convert 2 % of Americans from labor to capital each year. If that would be the KPI from America for the next 250 years, we would fucking crush it. I think it's about making Americans feel good again. 45 million Americans graduated college in the last 10 years with student loan debt, can't afford a home, can't afford health care. Looking at the situation being like, what the F could you leave us with? Oh, sorry, I'm just rambling on. It was a mic drop, but it was a tree drop instead.
1:12David Friedberg, welcome to Sorcery.
1:14David Friedberg:Thank you for having me. Last time I saw you, it was at Hill and Valley, and you had this really hot take that took the internet by storm. What was your hot take? Was this California bankruptcy? Yeah. You said that California was functionally bankrupt. Yes. Well, if the ballot initiatives and the tax policy and the battle that's going on in the state for spending and taxation is any indication, I think it's probably true. The current budget from the governor is something on the order of$30 to$40 billion short that they bridge with kind of an accounting thing. There is another 30,$40 billion on the ballot to be spent as a California constitutional amendment this year.
1:56David Friedberg:There is, you know, this massive kind of pension cliff. We have the highest tax rate. We just increased taxes. Highest tax increase in, I think, the history of California. So, yeah, it's not going the right direction. But, you know, it's a reflection, I think, probably of broadly what's going on across the United States. I mean, we are in year 250 of this republic. And there's probably a number of policies that were major missteps in the mid-20th century that bring us to this moment, which is not a very pretty moment. What are those policies? I'll start with like one fundamental truth. I think a fundamental truth is that there's this natural feature of nature that plays out in the economy, in business, in markets, which is this idea of compounding.
2:47David Friedberg:if someone or something or some organism has an advantage it takes over it ends up growing very quickly and it you know it can have a an outside kind of influence or presence in its ecosystem and same is true in business compounding is an advantage that arises from once you've accumulated some capital you invest that capital you don't have to do work to make that capital grow and it keeps growing and growing and growing. And that compounding advantage is to some degree a feature of capitalism, but fundamentally it led over time without the right policy from government sitting on top of it to an extraordinary kind of state that we're in today, which is the cost of everything has run away from the majority of Americans.
3:37David Friedberg:They can't afford stuff. And a small percentage of people have large assets, but a majority of Americans don't have assets. So when you fast forward some of the policy decisions that were made over the last 50, 60, 70 years to try and fill the holes that were being created, they were the wrong decisions. They were actually putting fuel on the fire. And it brought us to kind of this moment where the majority of Americans can't afford to pay housing. They can't afford their student loan. They can barely afford food. They definitely can't afford health care. And they don't know if they'll ever be able to buy a home.
4:15David Friedberg:And meanwhile, they're watching guys like Jeff Bezos and others go up into rockets and hold flowers out in space and say, look how amazing the world is, while the majority of Americans feel left behind. And things are fundamentally unaffordable for the majority of Americans. And so I would argue that there was a series of policies that took place over the last couple of decades that we could talk about that bring us to this moment. But I just want to like I should frame one important set of statistics. People think that there is this small cabal of people that have everything in America. And while there is wealth inequality, the statistics are a little bit different than I think what everyone groks.
4:52David Friedberg:And I just want to put these numbers out. The total asset value, the net worth of Americans is$183 trillion. You can look this up on the Federal Reserve's website. They track this stuff very well. $183 trillion. The billionaires in America, the evil billionaires, their net worth is$8 trillion. The bottom 50 % of America, their net worth is$4 trillion. dollars. So it is true that the billionaires have twice as much as the bottom 50 percent. But 183, you know, minus that 12 is 170 trillion dollars that the middle class of America has. And if you take the billionaires and take it down to like a 50 million dollar net worth threshold, that's 23 trillion.
5:38David Friedberg:So 23, call it 165 and then four. So the middle class is really where all of the net worth in America accumulated. And yes, there's an ultra rich group that has a lot of assets, but this is really what won in America in the last half century, that middle class. But the problem is the bottom 50 % left behind. So that's, I think, what is really driving and motivating the socialism today. Things are too unaffordable. There's an inequality gap. and there's this massive kind of motivation to do something about it. The problem is, I think a lot of government spending is the fuel on the fire that got us to this moment.
6:18David Friedberg:So we all think like, oh, you know, it was not fair. What happened? This is, you know, they've stolen from us, et cetera, et cetera. One thing we got wrong is tax policy in the US. And I know this is super boring to talk about, but it is crazy that when you have capital, it can compound. and then we put a lower tax rate, the capital gains tax rate of 15 % or 20 % on that capital when we're charging 40 % for people to do labor. That's the tax rate for labor. It's crazy that the tax rate was flipped. Basically, labor should have always been taxed less than capital. And if we had taxed capital at a higher rate than labor, then you wouldn't have seen this massive kind of inequity.
7:02David Friedberg:The second thing that we really messed up is Social Security. In 1982, Social Security, which is the safety net for that bottom 50%, that's really where their assets are supposed to sit. All their extra capital, which isn't really their extra capital, but it's yanked out of their paycheck, is put into the Social Security Trust Fund. It's an independent company, supposed to hold all the money, and it's supposed to invest it and make returns for the bottom 50%. In 1982, they changed the rules in Social Security, and all of those assets were invested in one thing, a US treasury bond, making three and a half percent a year on average since 1982.
7:37David Friedberg:As a result, there's$2.7 trillion sitting in the social security trust fund. It's a separate fund outside of the government. All the money and all it has is a treasury note. All that money went to the government. They spent it all. It's gone. So it's basically going to end up being a Ponzi scheme. If you had put all the extra money that was put into social security since 1982 into the S &P 500, the Social Security Trust Fund would have an extra$37 trillion in assets sitting in it today. Those would be stocks owned by America, by the bottom 50 % of America. And it would have created extraordinary value and extraordinary net worth for the majority of Americans who today are left behind and can't afford stuff.
8:14David Friedberg:And then pension plans, we had this other kind of problem, which we can talk about. But fundamentally, we had tax policy that was bad. We screwed up Social Security. and then we ended up spending all this money to try and bridge the holes on education, health care, and housing. And those are the three things that have become so unaffordable that no one can access, that the majority of Americans can't access them anymore. Education, in the last 30 years, administrative staff in educational institutions has grown by 6x while students have been flat. The reason is there's unlimited money for education from the government through student loans.
8:50David Friedberg:No kid who's 18 years old is going to make a good decision about what school to go to when you can go to any school you want with any degree, regardless of your personal GPA or income outcome when you come out of that school. As a result, it created all these misincentives where institutions could spend as much as they wanted on administrative staff, build a new building, put in a new rec center, charge more for tuition, charge more for tuition, charge more for tuition, because there was no constraints. The federal student loan program would give a loan to any student going to any college for any degree, regardless of the price.
9:24David Friedberg:In a private market, you would have tested how much does that education cost? Is that a good school? Is that a good degree? And are you a good student? And it would have constrained how much was being loaned for education. Instead, it was unlimited and everything broke and everything got so expensive and now people can't pay their student loan debt. And then healthcare, same thing. Federal government becomes the single payer. When the federal government's the single payer, everyone takes advantage of them, and the price of everything goes through the roof. And then the other kind of great lie of the 20th century was to make everyone own a home and put all of their net worth in one asset.
9:58David Friedberg:And when you do that, then the only way to keep Americans wealthy or to keep the middle class stable is to keep the price of homes going up, because that's your only asset. So if you want your net worth to go up every year, they need to have policies that drive the price of homes up every year. And that ultimately leads to a point in time today where young people can't afford those super expensive homes. Back in the day, 30, 40 years ago, you got a good job, you could buy a home. Today, because we made everyone put all of their net worth in their home, and therefore we had to keep home prices going up to keep everyone's net worth going up, people got screwed.
10:35David Friedberg:So these are the fundamental issues that I think, you know, we, the mistakes that were made over the last couple of decades that lead to this great socialist wave that's underway right now. You know, it's been obvious for the last couple of years, spending's climbing, inflation's climbing, and everything that the government touches gets more expensive. And it was obvious and inevitable that we were going to come to this breaking point where the majority of young people, 45 million Americans, graduated college in the last 10 years with student loan debt, can't afford a home, can't afford health care, looking at the situation being like, what the F did you leave us with?
11:07David Friedberg:Oh. What a grab. Sorry, I'm just rambling off. It was a mic drop, but it was a tree drop instead. it's all good the socialists are after me but they're in the room with us right now apparently anyway I've been talking a lot but I just think like I'll just clear out thanks Brett thank you is it a living tree or a dead tree it's a fake tree but anyway I think that's the moment that we're in right now and so it's scary I mean we can talk about you know, what else could be done and what's next. But it's pretty obvious that these idiotic policies brought us to this moment, one after the other, after the other, and then pouring fuel on the fire.
11:57David Friedberg:And then everyone looks for an enemy. They're all like, oh, the rich people did this. But, you know, the reality is it's these policies that are broken. And, you know, the thing that's acute right now, let me just pause there and make sure this is okay. Following in um in the current state in california i'm going to read you this quote there's this effort to pass a wealth tax i'm not a billionaire it's not going to affect that's what i thought you were a billionaire i'll maintain that that motion but i have a fundamental issue with the idea that the government should take private property from citizens regardless of their wealth or regardless of what it's being used for.
12:44David Friedberg:And the reason is that the United States was started on this really important principle of private property rights, because everyone that came to the United States came from a place where you didn't have private property rights, because tyrannical governments could take whatever the fuck they wanted from you, whenever they wanted to take it. Whatever background that country had, whether it was a socialist state or a monarchy. There were all these governments that didn't give you the rights to have anything because at any point they could take it from you because they had the rights to take what they wanted from you.
13:16David Friedberg:So the U.S. was set up to give people rights. One of those rights was the right to ownership, the right to private property. John Adams had this great quote. I want to make sure I get it right. He said, property must be secured or liberty cannot exist. And He wrote a couple of years after this an important piece that said, The moment the idea is admitted into society that property is not as sacred as the laws of God and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. So it's very poignant on the 258th anniversary of the United States to read back on this founding principle of the United States and look around and realize we fucked up our public policy.
14:00David Friedberg:We fucked up our tax policy Half of America is left behind They can't afford anything Half of them are looking at all the wealthy people Being like, what the hell And the course is Seize the private property And start to distribute it Because if you think about it Once you take that step Once you have a right to take someone's private property After they've paid their taxes They've earned their income They've paid their taxes They buy a home They buy a car They buy a watch They buy whatever A wooden table And they're like, this is now mine And the government can come in and say You know what? we need it because we got to pay bills.
14:31David Friedberg:We're going to take that from you. That's when anarchy and tyranny kind of ensue. And so that's why I worry so much about this wealth tax in California and the conversation happening about instituting a wealth tax, which is really an asset seizure throughout the United States. It sounds good in principle to take money from the rich and give to the poor. It sounds fair. It sounds right. It sounds just. But it is a violation, I think, of one of the reasons the United States was started. And there are other policy paths that can be taken to fix the wealth inequity, to fix the injustice, to make sure that the wealthy do pay their fair share, and to address some of the policy issues that got us to this moment, and hopefully not get too far down the path where we can't actually reverse them.
15:16David Friedberg:So I think it's really important that both sides, politics, politicians, and all that, take a look at this moment and say, number one, we recognize the state that we're in. We recognize how fucked half of Americans are. We recognize how much we fucked this country up through these idiotic policies. Stand up and say they were idiotic and what we got wrong. And then be really clear about the changes that need to take place, because otherwise you are going to have tyranny slash anarchy, which are both basically the same happening over the next couple of years in the United States. An interesting point on the wealth tax.
15:48We had Brian Singerman on. He was a partner at Founders fund for a while with Peter Thiel. He's on my board. His point was the wealth tax will actually start to hit the middle class more and hurt the middle class more than the top 1 % or top 001%. And not only that, it's going to sweep across the country.
16:10David Friedberg:Yeah. So Ro Khanna and other aspiring politicians have said, we want to put a wealth tax in on people over X million, 50 million some people have said 10 million some people have said 1 million and you see how quickly it kind of has cascaded down because again once you open the door that says the government can take any of your property suddenly all property is the government's property which leads to mob rule which means 50 percent of people can take whatever they want from the other 40 percent 49 percent 51 can say i want 49 percent people to give me half their assets and then you have a very slippery slope to nowhere.
16:48David Friedberg:That's not good tax policy. It'll cause people to flee and run around and get away and it'll cause more discontent, but it doesn't solve the policy problems. It doesn't solve the problems that the majority of Americans don't own assets. They don't own equities. They don't own a piece of the productivity that drove America. Think about how fucked up this is. These 50 % of Americans that were told when you retire, you will have social security and it will take care of you. They never got to own a piece of the American businesses that drove the economic engine and success in the United States. All that they owned was a three and a half percent treasury bond from the government.
17:23David Friedberg:That's what they owned their whole life. Three and a half percent yield per year signed by the federal government will give you three and a half percent at the end of your life. And by the way, it's capped in how much you're going to make. If they had bought the S &P since 1982, they would have 37 trillion dollars. They all were left behind. That policy needs to be fixed. We can fix that policy. We can fix the policy where everyone's getting these what are called defined benefit programs, these pension plans in public governments. I'll give you another statistic. In 1974, there was a law called ERISA that passed.
17:55David Friedberg:After that law passed, it basically changed the rules around pensions. Prior to that, 40 % of Americans had a pension plan at their company that they worked at, IBM or whatever your local business was, AT &T, and you had a pension plan. When you retired, you got a piece pension plan paid out to you. The problem with pension plans is if a pension plan makes 3 % a year, 4 % a year, or 5 % a year, compounding for 40 years, the difference between 5 % and 3 % means that this pension program is way overfunded or way underfunded. And the pension plans simply don't work. All these companies will go bankrupt.
18:34David Friedberg:So they all switched over to 401ks beginning in the 80s. So 1980, 40 % of Americans had a pension plan. Today, less than 8%. 1980, 90 % of government workers had a pension plan. Today, 90 % of government workers have a pension plan. So government employees were kind of left with these pension plans, while the middle class that worked in private companies got these things called 401ks. You know what they had in those 401ks? They had equities. And they owned assets that were productive. They owned a piece of American business. And that grew and grew and grew. And that's how they became$170 trillion of net worth today, the middle class, because they owned a piece of the American business.
19:16David Friedberg:You know, we really did kind of fuck this up. And we got ourselves to a point where, you know, we put the wrong policy in place. And I think it's not too late to fix that, right? Like, every American, instead of having a social security account, they should have the equivalent of a 401k, where they own stocks. And when they retire, they get all those stocks. Or they can start taking a piece of it out when they turn 50 and take some money out every year and start living on that if they want to. You know, this whole idea that you only get a fixed income when you turn 62 or whatever it is, is crazy.
19:47David Friedberg:You should put money in, own a piece of business that makes America drive, that we all participate in, grow with it, and take some out when you want. This episode is brought to you by Brex, my favorite. it. You become what you spend on. And I refuse to spend my time on work that shouldn't exist. Expense reports, receipt chasing, and manual closes. The companies building what's next from Vercel, OpenAI, Anthropic, Granola, and Deepgram all made the same call. They all run on Brex. Brex is the intelligent finance platform that combines cards, expenses, and banking into a single stack with agentic finance built in.
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21:18David Friedberg:Visit Turing.com slash S-O-U-R-C-E-R-Y. I'm curious because for most of these politicians, these people that are pushing the socialist behavior that are kind of using that as a scapegoat, blame the billionaires. Why are they so wealthy? Take money from them versus the majority of people. You know, I'm sure it's just easy to blame them. But I guess like what are the underlying incentives to do that versus fix policy? Because I'm sure it's politics. Yeah. Political theater. It's a lot easier to claim an enemy, get elected, than it is to fix a difficult policy problem. And I think that's the fundamental kind of concern I have right now.
21:58David Friedberg:Again, like, I don't think that the people that are complaining and that are trying to go down the socialist path are wrong in how they're feeling. I think they're absolutely right. And I think the politicians take advantage of it. I think that they feed into it in a way that doesn't actually look at realistic solutions. It's about inciting emotional responses to get themselves votes. I mean, this is as old as politics. Tell someone that there's a problem. Tell them who's responsible for it. Tell them you're going to fix it. And you get elected. You know, you've now got them emotional. You got them riled up because they see an enemy.
22:34David Friedberg:And you're the politician that's going to solve their problem. and that's the moment I mean look Ro Khanna is the perfect example of this this is some dude who has a 300 million dollar net worth his children have memberships at three country clubs literally his kids have memberships at three country clubs his kids own like a piece of country clubs the dude lives in a 10 million dollar house in Washington DC and he used to be the moderate Silicon Valley guy who would go around to all the tech CEOs and founders and VCs and be like, hey, give me your money. I'm a moderate. We're going to make the Democratic Party work for you.
23:10David Friedberg:And then he saw the tides change. And he's like, oh, this is yum yum. I'm going to run for president in 2028. That guy, just to be clear on this, he is so unlikable. I think he'll likely end up being secretary of housing and urban development if AOC is elected president. Okay, so he'll be on the camp trail. He'll maybe convince 2 % to 3 % of people to vote for him. and then he'll end up in this role where, you know, that's his progress in life. But it's so crazy because he saw the moment and he seized it. He said, OK, we can go for socialism. That's what we should do. And rather than be brutally honest by looking around at all the places where socialist policies have failed and rather than diagnosing the actual policy decisions that got us here, I do not disagree with him or Gavin or anyone else that tax policy in America is fucked up.
24:05David Friedberg:When billionaires borrow against their unrealized capital gains, they should pay capital gains tax. Capital gains tax should be 40%, not 15%, or 18%, or 20%. They should pay the same as labor. In fact, labor should pay less. Income tax should be much lower. Capital gains should be much higher. That would be a fair tax policy. I don't know a lot of people who are wealthy who will look me in the eye and truly disagree with that. It's a lot of bullshit when we all say, hey, it incentivizes investment. Great, it incentivizes investment. What are you going to do with your excess capital if the tax rate is 40 % versus 20 %?
Read the full transcript
24:40David Friedberg:You're not going to invest it now? Of course you're going to fucking invest it. You're going to invest your money. We can charge more for capital gains and solve this problem. But instead of those practical solutions like I just laid out, they're all like, let's go fire up the fucking socialist train because it's worked so well in fucking Cuba and Venezuela and the Soviet Union and all these other places. Look how well it... Oh, wait. Don't look over there. We're going to do it right this time. We're going to get good socialism this time. It's a lot easier to do that than it is to actually go through the boring, annoying fucking policy points that I just went through and say, here's how we're going to solve each one of these.
25:15David Friedberg:And what both parties are missing is a policy agenda that says, here's the shit we got to do to keep America from going down the socialist death spiral. And they all should be fucking doing it. Both sides. Forgive my language. That's okay. Yeah. I don't know if YouTube will, but it's fine. Yeah. I think it would be really helpful to explain socialism and what actually happens when this takes off. It's kind of like a virus. I don't know. What was that? We watched Project Hail Mary. What was that bacteria thing? Astrophage. Exactly. It's like afrophage? Astrophage. Astrophage? Yeah. Socialism is like astrophage.
25:57David Friedberg:It is. It is. If you study it, there's an inflection point. Part of socialism is like multi-level marketing. There's an aspect of like, you know, you just got to sign up one person per day. You go around and, you know, it's incredibly well organized. And the Democrats are pulling their hair out, by the way, mainline Democrats. They're like, what the fuck? Yeah, yeah. Republicans are pulling, they're just like, what? This is, this is nuts. There's a recruiting model around it. and that recruiting model involves like bringing in organizing really well door to door and the other thing they're really good at in socialism um in in driving the adoption is to create spectacle uh zoran mom donnie jumping in the pool yeah um these viral moments in front of a desk knocking on the glass in front of ken griffin's condo those viral moments that we've all seen that we all watch are key to the strategy.
26:57David Friedberg:It's the spectacle. It draws people in. And then it's about recruiting, slow conversion rate. And then everyone's responsible for being part of that. We're all now in the cult of socialism. And we all have to share the views of that cult. And it grows. Again, I don't want to disparage the individuals that are advocating for it because they're coming from a place of hurt. This is the hardest thing for anyone to hear that hates socialism. It's not coming from a place where they're evildoers, but it's bad policy. Because ultimately it leads to a drop in productivity. It leads to poverty. It doesn't optimize for the most important thing that I think the United States should optimize for, which is economic mobility.
27:43David Friedberg:Giving everyone the opportunity to move from labor to capital. Socialism locks everyone in labor for the rest of their lives. Everyone will always be labor. But let me tell you something about America. I came here, graduated college with$19 ,000 in debt. Had no money besides that. Worked, paid my debt off, succeeded in America. I had no fucking silver spoon introduction. I had no nepotism. You didn't have three country clubs? Didn't have three country clubs. It worked out. And I can say that about a million of my friends. It worked out. there's this opportunity set in America that's unlike anything else in the world ever.
28:19David Friedberg:And I think the key metric for America should be to convert 2 % of Americans from labor to capital each year. If that would be the KPI from America for the next 250 years, we would fucking crush it. Because what that means is that in 50 years, every American would be able to choose whether or not they want to work because they could just live off of the capital that they've accumulated, that they've appreciated, and they can now take that capital and live off of the income from that capital and live whatever life they want to live. That should be the goal for America. And that metric of economic mobility, no politician talks about.
28:55David Friedberg:They use those words, economic mobility, and they throw it away and they never talk about it again. But what's the metric behind it? What does it mean? Economic mobility means that at some point in your life, you've saved up enough and invested enough that you can now live off of your investment. and you don't have to go work for X dollars an hour or X bucks a week or month or year to live your life. When that transition happens, it is a beautiful moment. I've experienced it. I went from meeting to be labor in order to pay my bills and pay my rent, pay my healthcare bills, buy my food to a moment where I didn't have to work.
29:32David Friedberg:I still choose to work because I love the things I do. But every American should be afforded that opportunity to make that transition. That's what economic mobility is. That's what this system today allows. And it is a fucked up tax policy and the government spends too much and ruins everything. That needs to be fixed. But the system itself, the underlying system of capitalism works and we just need to make it more accessible to more people. But as soon as you take that system away, no one has that opportunity and economic mobility is lost. And then all these Americans who are advocating for socialism will be stuck as labor for the rest of their lives.
30:06David Friedberg:What socialism does is it puts a foot on everyone. and it says we're all down here and we're all stuck. Except, of course, for the rarefied few who get to be in the Politburo that get to make all the decisions. And every socialist country in history has had the upper echelon that lead the socialist party that get to fly private jets, live in$10 million homes, have three country clubs, and be part of this elitist Politburo while everyone else is down here. But no one can transition up. And if we lose that in America, we lose America. and actually the world loses america so one positive good thing that happened on america's 250th birthday was brad gerstner's trump accounts so could you talk about those and what that's offering children because i mean if that works out and parents are seeing how much their children's accounts are accumulating won't they want them won't that kind of overtake social security where you're only getting three percent like do you think that'll take over that 22 percent so we're at um day one of trump accounts um or invest america accounts or whatever they end up being called obviously it turns a lot of people off by calling them trump accounts yeah um but the idea is right it's a 401k for everyone social security needs to flip into being a 401k for everyone tomorrow.
31:30David Friedberg:We have five years till Social Security is bankrupt. That's not my assessment. That's the CBO score. That's what the CBO says is going to happen. Congressional Budget Office. When you look at how much is going to get paid out and what the pay-in rate is, Social Security runs out of money in five years. We should be flipping. It's got$2.7 trillion in it today, that account. It's a fucking treasury. But they should sell that treasury. They should take that cash and they should go buy the S &P 500. And then everyone that has Social Security should get an account and they should get their money and it should buy the S &P.
32:05David Friedberg:And it can also buy private stock and it can also buy whatever. If the federal government is now going to go and set up a private equity account, a sovereign wealth account to buy assets in private companies, I personally don't love that. I don't love that America is like suddenly going to become public private. You know, that's not my free market kind of like belief. But if they do that, then all of those shares can go distributed to those accounts. And we could flip Social Security tomorrow into that system and expand it in that way. And we should do the same for all government employees and get them off of these pension plans.
32:37David Friedberg:These pension plans are poison. The fundamental problem with these pension plans is that they will ultimately end up bankrupting the states or they will become Ponzi schemes where people get screwed because they're expecting retirement benefits and they don't get them. And they're going to get bailed out somehow anyway. They should all be flipped to retirement accounts. They should all be flipped to 401ks. Everyone in America should get the same thing. 401k, you own a piece of these equities in America, and we all participate together in the growth of America. And then everyone's incentivized to see businesses succeed.
33:06David Friedberg:And then the more you put in, the more you can kind of set yourself up to transition from labor to capital sooner. You should have the opportunity to do that. So, hey, look, I mean, if you want to spend less and save more, go for it. Throw more in the account, and you can retire sooner. And I think that's what everyone should get. So I think the Trump account set a good standard for kids. I think it's a great way to think about this. We have to make this change through legislation. As you know, Democrats, Republicans can't seem to do anything today. This next wave, between now and 2028, it's going to be fucking chaos in America.
33:42David Friedberg:It's going to be AOC and the socialist wing versus Gavin and the centrist wing versus the kind of Republican mainline versus the Republican ultra-Rike angry nationalist. It's going to be a nasty four-way battle over the next two years. So how in that environment are we going to really set America up for success? How are any of these guys going to stand up and lead and say, here's what's got to come next for America to survive? It's going to be really hard. It's going to take some pain, I think, probably until after 28, or we need some of these guys to decide they want to be leaders and they want to buck the party and they want to buck the fight and they want to say, you know what?
34:19David Friedberg:We got to do something different. We got to give everyone a piece. So how do you psyop the psyop? Look, I mean, I'm here today to talk about this because I think it's important to have the open conversation. I don't know if anyone listens to this. Your show's got great viewership in Silicon Valley, but I don't know if it's going to affect the... I don't know if people are going to stay tuned in this far. You'd be surprised. So we went to Paducah. You know Paducah? It's in Kentucky. So we went to Paducah. Why did you go there? For the General Matter opening. I think it was like about a year ago.
34:53David Friedberg:Okay. And I was there. I was standing in line to get on this bus. Yep. One of the city leaders of Paducah watched sorcery. That's awesome. So I reached Paducah. No, no. I believe that you've reached Paducah. I don't know if the viewer made it all the way to minute 83 or whatever of this episode with me talking about public policy. But I'll keep going. But that's why I think we've got to have these conversations. I'm just hopeful that more of the politicians, you've got to face the hard facts. We fucked up. Talk about what we fucked up. This is what we got wrong. Both sides need to talk about it.
35:32David Friedberg:You cannot ignore the bottom 50 % of America. Describe what we got wrong and say what we're going to do to fix it. But if you take it all and you just reduce it down and treat everyone like an idiot and pretend that everyone's dumb and you can convince them that there's a small number of elites that have totally taken over everything and you're left with nothing because of them, vote for me in socialism. you are lying to them, you're perpetuating more of these lies, and you're creating a sinister environment that's going to lead to America continuing to be split apart and ripped apart in a really nasty way and rob everyone of the opportunity that America has afforded us for 250 years.
36:12David Friedberg:For everyone to have the opportunity to progress, to have economic mobility, to have liberties, to have property rights, to have all these amazing vested rights in this country, and to sit around and tell people reductively, because I think you're dumb, this is the bad guy, let's go socialist and let's go get all their stuff. I don't think that's the right answer. And I want more people to kind of stand up and say the right thing. So I think that's the only way. Look, I mean, you ask about a psyop. The thing about the socialist movement is it's designed to be viral. It's designed to be eccentric.
36:45David Friedberg:It's designed to be sensational. It's designed to be emotionally titillating. It's designed to have an enemy that incites emotion inside of you, to drive you to do things extraordinary, to go out and be a recruit. It's like a cult. You got to go recruit more people to be in it. This other side is cerebral. It's rational. It's harder to recruit. That's why I said, I don't know if people made it this long. It's a discourse. It's a conversation about here's what we fucked up. But maybe it's about being emotional about all those things. And maybe it's about getting all the people that you would otherwise think would be rallying around socialism to say, you know what, that's right.
37:24David Friedberg:This other thing is right. These are the policy changes we got to make. We did all get it wrong. But it starts with everyone saying we got it wrong. If you've got people running around saying, hey, policy's been good in the United States for the last 50 years, you're a fucking liar. You've got to be able to stand up and say we got it wrong. And I think that's the first step. And no politician wants to say we got it wrong because they'll get unelected. then you go from we got it wrong to here's the right answer and here's how we're going to get it done and you got to have a group of people start to coalesce around that idea.
37:53Jeff Bezos actually had quite an interesting idea. I know you mentioned it was 183 trillion dollars of
38:01David Friedberg:total net worth in the United States. And so the bottom 50 percent of U.S. earners, he thinks that's around like$75 ,000 a year in salary. There's no tax for them. That is correct, yeah. And now we've... Oh, okay. Let me get that shrink in. I don't know if we have like a water to put in it or something. Like a water bottle to hold it. It's all good. We're going to call that tree the Republic of the United States of America. Quite the symbolism. How many leaves are there? I bet you there's 50 leaves on that tree.
38:43people are gonna finish the interview there's gonna be zero tree yeah one leaf at a time
38:50David Friedberg:it's sad you ever watch the movie the never-ending story no it's like slowly you know the oh my god you gotta watch it you gotta watch that movie no my god yeah how old are you uh 21 one i'm just still watching the movie totally kidding yeah you should watch that movie and fantasia which is their land is falling apart piece by piece the dog is called the luck dragon and the kid on the horse is a treyew a treyew yeah the luck dragon's name is balcour yeah you should watch it yeah you will enjoy it no idea what you're talking about today's episode is sponsored by VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital.
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40:49Visit deal.com slash sorcery. That's D-E-E-L dot com slash sorcery. Okay, we were talking about Jeff Bezos.
40:58David Friedberg:Okay. So Jeff Bezos' plan, what he thinks, what he proposes, is that the bottom 50%, they are around like$75 ,000 a year in salary, pay zero taxes. That's only 3 % of tax taxes. Total tax revenue. Yeah. And I'll tell you the other changes on tax. Capital gains tax should go up to 40%. You do that, you're going to have some fun. But by the way, I hate tax and I hate government spending. So you can't do this without fixing the government spending problem. But if you want to, we also have a big debt problem, $39 trillion in debt. Deficit is insane right now. Joe Lonsdale said he's rich, but he would pay 90 % in taxes if it actually worked.
41:44David Friedberg:No, right, if your money goes to something good. And this is why the money that's being paid into Social Security and pension plans should not go into the government coffers. It should go into your own account. If you're an individual putting money from your paycheck into something, why the hell are you putting it into the government? Shouldn't you just put that money in your own account? You should have a healthcare account. You should have an education account. You should have a retirement account. These should be your accounts to manage. not the government. And if there's a shortfall, there's ways to fix that.
42:16David Friedberg:But as soon as you let the government take it, it gets destroyed in the system, destroyed. It's like a fucking shredder of money. You're taking all your money, you're putting it in the paper shredder, and then you get like a little bit out, it's like damp, and it's like covered in coffee grounds, and you're like, okay, I got my value back. That's what the government is. Or they say that you owe money. Yeah, exactly. You owe us more. Oh, and by the way, also you can't afford anything because we've made everything too expensive. But yes, 100 % drop the income tax, bottom 50 % to zero. Raise the capital gains tax to 40.
42:47David Friedberg:Make sure that if people borrow against unrealized capital gains, that they pay their capital gains tax at that point. And if you have a, there's a lot of loopholes in the tax law. By the way, my comments on this, everyone's going to hate me. Like literally everyone's going to hate me over this. But it's the only way. Any time that there's a loophole that lets people transfer one asset for another without paying tax on the game because it's called a tax-free transfer, you got to cut all that. If you don't cut all that, then people are compounding value without paying taxes when they're realizing value along the way.
43:25David Friedberg:That's what's unfair about the tax code today. If you invest in a company, a startup, and it goes well, it's not really fair for you to take the money you just made in that startup and not pay your tax and go buy another stock and keep growing your value. You should have half the money or 60 % because you should pay your 40 % tax rate. Then take the 60 % that's left over and go buy the next stock. And that's the way to kind of minimize the compounding effect where people that have capital run away in terms of net worth, while the people that don't have capital get left behind and are struggling to get to a point where they can get capital.
44:02David Friedberg:We got to fix that tax code problem, too. So with all those changes, though, how does that actually get put in practice? The inheritance tax. So there should be a step up, meaning like when you die, people don't realize this, but this is a big part of the problem. not a big part but this is another problem which is if you die and you have a large asset base your inheritors get to use the original the value transfers and they get the step up on their basis so they don't pay so now when they ultimately sell no one paid the delta between what you paid and what they got it out no one paid that tax so that's another kind of thing that people hate if we bring it up and say hey this should happen that's another way to fix another loophole in the tax code that's being created.
44:44David Friedberg:So the asset transfer stuff, the difference between capital and income, the inheritance problem, the step-up problem, these are things that can be fixed in the tax code. But none of it matters if we don't stop the wasteful spending on housing, education, and healthcare. If we don't reform how the federal government plays a role in those markets causing runaway price escalation that makes all of those things so expensive that no one can afford them anymore, then none of the tax stuff actually matters. You've got to fix those three things. And if you don't fix those three things, then they're going to continue to compound up in cost.
45:19David Friedberg:And no one's going to be able to afford a house. Everyone's going to be stuck with unlimited debt. They're never going to be able to pay it off. And health care is going to be unaffordable for everyone. And the health care system is going to spiral away. Those are three very complicated problems. Education, I think, is probably the easiest, which is if you end the federal student loan program, I think you solve 90 % of the problem in education. So how do you actually put these into practice? How would the government actually do this? You've got to pass laws that cover everything I just said, and you've got to do it before the country ends up on fire.
45:47How long do we have?
45:48David Friedberg:Depends who you ask. Social Security is bankrupt in five years.
45:55David Friedberg:Socialism could take both houses and the White House in two years, two and a half years, if the socialist movement continues to grow virally. Well, wouldn't that happen sooner by midterms? No, well, the White House is, the president is told. I know, but like the movement would start. Movements carry a lot of the weight. Yeah, I think between now and 28, there's no conversation about what the alternative is. Like if I'm young, I'm one of the 45 million people that graduated in the last 10 years. I can't pay my healthcare bills. I can't pay my rent. I can't buy food. I'm like, of course, socialism.
46:33David Friedberg:What else is, where are the other options? So the costs and everything associated with that That is, and definitely like the permanent underclass is what some people will say, is one part of the story. But another layer of narrative on top of that is AI taking everyone's jobs. It's another layer of fear mongering that is rising with the socialist movement. Yeah, so that's bullshit. I don't say it's bullshit to dismiss people's anxiety. I say it's bullshit to just be truthful about the facts on the ground. As soon as AI starts deleting jobs from the economy, I will change my position on this. but I need to see it factually happen first.
47:11David Friedberg:There was a Newsweek article. You can pull it up. 1963. All about how computers are going to take all jobs and America is going to run out of jobs. We're going to get rid of all jobs. 1963, Newsweek. There were computers back then? The mainframe. So at that time, there was this fear-mongering that was happening that these big mainframe computers, these big scary electronic boxes that were getting installed in high-rises and in basements, were starting to do the things that we all do. Accounting, typing, calculations. All these things that Mainframe started to do, we were like, what are all the typists going to do?
47:53David Friedberg:What are all the telex operators going to do? What are all the calculators going to do? The people that do all the calculations? Who's going to do all the accounting? What are all the accountants going to do with themselves? Since that time, mathematician jobs, statistician jobs, accounting jobs, service jobs, they all went up. They all went up. And then when the desktop revolution happened in the 1980s, you can go back, Time Magazine, Newsweek again. There's cover stories about the loss of jobs. We're going to lose all jobs in America. Because these new desktop computers, it's like the desktop computer side by side with the worker.
48:31David Friedberg:And the worker is like, hmm, my job's over. like this thing's replacing me. Desktop jobs took off with the computer because every one of these stages, every one of these steps was an improvement in human productivity. A human uses the mainframe, the desktop, and the AI. And when the human uses that tool, that point of leverage, they can do so much more. And not only do they not lose their job, but they're worth more because they're the operator of that tool. So they can now operate at a rate that's 10 or 100 times more. And it's not that a company runs out of opportunities to do stuff. The goal of a business is to grow.
49:09David Friedberg:So when people are able to do 10 or 100 times more, and you can pay them 50 % higher salary, you hire more people, and your business grows. And that's called economic productivity and economic growth. Productivity means more with less. And growth comes out when productivity happens every single time in human history. And every time, every single time, they've said, but this time is different. In the 1960s, they were also saying that factories were being automated by robots. It was when the first robotic arms were coming out. And they're like, but this time's different. This time, it's because the robots are going to take over the factories.
49:44David Friedberg:Didn't happen. I mean, we offshored factory work to Asia, but that was a global kind of trade problem, but it wasn't related to technology. And I think this is the same moment. So it is a fear tactic. It is a tool that's being used. It is a tool that's being used to influence everything from, you know, the socialist movement to also saying, hey, by the way, data centers shouldn't exist. And, you know, we should slow down. There's motivation by certain groups to see that happen. Our competitors, America's competitors, they don't want to see us succeed as a country. And so, you know, there's a strong incentive to put a little fuel on the fire of that message and keep it going.
50:29So you did an interview with Ray Dalio not too long ago. I think it was back in March, something like that. You were talking about the global economy. You were talking about America. And he specifically brought up this productivity gap that you're talking about and the K shape that is taking place in the labor force. So in terms of studying that, studying history, how does that evolve?
50:54David Friedberg:There is a big part of this K-shaped economy that is rooted in training people to progress through the workforce. So there's a big investment being made to support the transition of labor. Like, how do I use AI? Everyone thinks like, Most humans are idiots and they're not. Every human has extraordinary potential. I mean, I make the argument, I don't think a single human in the history of Earth has ever reached their full potential. Not one. To some degree, every human has failed to realize their potential, has fallen short. It says to me that there's limitless upside in every human. And this idea that people are despondent because they don't know how to use AI today is the equivalent of saying people are despondent when the iPhone came out in 2007.
51:49David Friedberg:And they would never learn how to use the internet. Suddenly everyone can use the internet. There's no one that can't use the internet to search something, to find something, to discover something, to learn something, to solve a problem, to activate something, to do something that they're interested in. And I think the same is going to be true here. I think every person is going to have the opportunity to kind of advance with AI as it becomes more ubiquitous. It's so clunky right now. It's all over the place. You know, there isn't like, what's the tool I use? How do I use it? It's not super clear.
52:23David Friedberg:I don't think companies even know. I don't even think the best AI advocates really know right now. And honestly, I don't know if it's as good as everyone thinks it is right now. That's the honest truth. We're talking about token bubbles right now. You know, there's a lot of bubble conversation in AI. Like, are the enterprises really getting all the use out of the AI that they're spending money on? So I'm not sure if it's like that critical of a threat in terms of that K-shaped economy. I mean, I do think that if services, jobs, if kind of the higher incomes, if there's a tax effect, I think we can start to bridge the gap a bit.
52:59David Friedberg:But again, the more you try and say, oh, the government's going to solve this problem by creating training or whatever, the worse this is going to get. Like Meta and others have this workforce training program now where they're like taking people that have never used software engineers and trying to help them. They're also doing, sorry, they're doing workforce training for plumbers, electricians, contractors. I mean, you can make six figures in these roles and they're taking people that didn't go to college that don't have background and then they need those roles. So they're putting people through training programs to help them earn more income and transition into a workforce and make more money.
53:33David Friedberg:I think there's a lot of that going on. I've heard about a lot of big companies because there just isn't enough skilled laborers. Skilled means, you know, you have some skill in doing something. And so there's this like company based training system. That's the way markets are supposed to work. That's teaching people how to do stuff. and I'm optimistic in that sense I think it needs to be tracked but I'm optimistic yeah it's uh I mean with the conversations that we've been doing uh in the companies that I profile whether it's through fundraisers and that kind of thing it's just more and more apparent like we were we were in this company it's a wire harness company alumni from SpaceX they're down in LA and it's called center systems they created a training program to pull literally anybody anybody they could have worked at walmart they could have been a bus driver they could literally have been anything to train and be able to create wire harnesses in four weeks it used to take two years yeah they now do it in four weeks and then they have a pretty solid job it's like you're making wire harnesses for like rockets and stuff totally hadrian's another one they're a manufacturing company yep they they just have these training programs i mean this didn't happen even like too long ago.
54:42I mean, like think about Amazon warehouses.
54:44David Friedberg:Totally. Those were all that was an entire boom of jobs. Obviously, they're changing, but it happens in like plumes. By the way, the K-shaped economy, I just want to go back on this to your point. Yeah. I don't think it's about jobs. I think it's about wealth. If you're stuck in that lower 50 percent because things are so unaffordable, you can't save money and you can't pay your bills and you're not earning enough. You're stuck here. Meanwhile, people that can save money, that can pay their bills and are saving more, their wealth goes up and they spend more and they go to fancy hotels. And that's what we're seeing in the economy.
55:18David Friedberg:It's a wealth and spending divergence that's underway associated with people that can't transition because they can't save because things are kind of getting too tough for them. Again, we've got to get cost down. I think the income going up is going to happen. We're seeing it right now with all these new training programs. Yeah. Is there anything that we didn't cover that you want to cover? I mean, I wanted to talk about these points because, you know, I've done a lot of reflection on this 250. Everyone writes their fucking reflection document. 250, look at me, I'm important. I thought about the 250.
55:52David Friedberg:Right. So I was like, should I write something? I'm like, no. But like the more I study this stuff, the more I look at it, the more I'm like, what the fuck did we do? we really fucked up because i try to understand the root cause of like the disdain the socialist movement like where this can't just be a ccp psyop it's coming from a place of hurt of turmoil of fundamental struggle so i'm worried about america because it's afforded me everything i have in my life and many many people i know i think it brought humanity forward like america in the last 250 years, I don't need to run the list of inventions down from, you know, like the factory, the automotive line, landing on the moon, the transistor, nuclear power, the internet, AI.
56:40David Friedberg:I mean, biotech, it's everything came here because we afforded everyone the opportunity to have liberty and inherent in that liberty of property rights and inherent in that condition is the ability for people to take risk and do crazy shit and drive the world forward. And it is fucking awesome. And we are at risk of blowing it all up because we are not willing to admit what we fucked up and what we need to fix and being very direct and clear about these things and fixing it before tyranny and anarchy take hold in America. And I do not have enemies that I'm declaring. I'm saying everyone is right.
57:25David Friedberg:But we need to be honest about what has happened to get us here and what the right path is to get us out of it, rather than walk into that dark, dungeness hole of socialism, which will leave everyone behind and will destroy all of this. So that's why I wanted to talk about this stuff. And so I appreciate having the opportunity to do it. Well, they do say the first step to recovery is... Admitting you got a problem? Yeah. We have a spending problem. And we have a tax problem. And we have a whole political class that belongs in AA. The whole political class lies to themselves and they lie to America.
58:03David Friedberg:And they've been lying for decades. And if I have one enemy, it will be the politicians that lied to Americans. I don't blame Americans for finding themselves in the situation that they're in. And I blame the bad policy that brought us to this moment. And I'll say one. I just don't even know if the politicians realize it. Because I don't think for all the politicians I've sat down and interviewed, I've spent hundreds of hours with politicians. Elected, appointed. 99 % of them don't take the time to think about this. Well, they're in the hamster wheel of trying to get the next position. They've never actually had a job.
58:39David Friedberg:Raise money, get elected. Raise money, get elected. Raise money, get elected. and I just think we got to put our head up and be like whoops like a fucking prairie dog
58:53David Friedberg:and be honest about it and if you know I'm not going to sit here and say like hey let's all write up a policy agenda and go execute it but I think we got to be honest about what got us here and what we got to do to get out of it this government spending problem has driven the cost of housing, healthcare, and education through the roof, and the fact that we haven't given people access to own capital in America, and that we've created a tax policy that keeps them down. We fix those things. We're golden for 100 years. How did you research all of this? I use the internet. Okay. Any specific? Google.com, Gemini.com, Gemini.google.com.
59:34David Friedberg:That's it. I mean, I just go deep on the stuff, because the whole statistic on wealth gap, to me, I was like, how much do the billionaires really matter? And I was surprised that the billionaires had$8 trillion of the 183 and the bottom 50 % have$4 trillion. That's a bad statistic, but it's not as crazy as you would think. And even if you make it a$50 million net worth, it's$23 trillion. But then there's still another$158 trillion that the middle class own. That's like America has been prosperous in that sense. It's the bottom. And America hasn't like, it's not like the rich have taken everything from the poor.
1:00:10David Friedberg:That's not true. The truth is that the bottom 50 % were left behind because of bad tax policy, because of spending and healthcare, housing and education, and because we didn't give them access to owning capital. And because of that, they were left behind. And we fixed those problems, those five things. We can fix this quickly. that's you know so that that was my conclusion when i spent hours and hours on long walks talking to gemini going on the internet reading all this shit and i'm like what no way and then i read about the history of like erisa and the social security amendments in 82 i'm not going to bore you with all this stuff but some of the policy you'd be like why did you do that so dumb well they didn't have access to the internet and the promise of a house is such an easy thing to sell everyone should own a house what happens when everyone owns a house that's the only thing they own.
1:00:59David Friedberg:Now you got to get the price of the house to go up every year. Now housing is unaffordable to young people. Obviously, it's fucking stupid that we did that. Like we shouldn't have done that. You know, you go down this list and you're like, what? So we could go on and on about these policy decisions, but there's a small set of them. Healthcare, housing, education, tax policy, and then the access to capital. Those five things. And I think we can kind of reset a little bit and recalibrate but there is this kind of make amends moment that we're in um there has to be a give there has to be a give right now um it starts with everyone kind of looking in the mirror and being like okay we fucked up and by the way i'm a hardcore libertarian so all of this is like foreign to me i'm like in this weird like you know it's like what am i doing talking about not like charging more taxes.
1:01:53David Friedberg:I'm like, at the end of the day, we do live in a society with other people. Libertarianism works well if you're willing to leave people behind and you don't expect that the social structure will become disordered over time, but it does become disordered over time. If everyone lives on an island and there's a guy on a hill in a hut and he's making all this food and he's really good at making food and the hut fills up with food, what are the other 99 people on the island going to do if they don't have food? they're going to go get the food. They're going to say, we want that food. You could all sign a document that says, the rules are we can't touch each other's stuff.
1:02:31David Friedberg:But that's what's going to happen. We've got to fix the rules because we do live in a society where everyone's got to feel like they have opportunity to transition from labor to capital. 2 % a year would be my metric for America. And we've got to try and make amends in this moment without letting it become a dark, shadowy fight. make America great again? No. I don't think it's about making America great again. I think it's about making Americans feel good again. Okay. I think that's like what's fucked up right now. No one feels good about the state of America even though things are very prosperous but for many people they don't feel like things are prosperous and many people then don't feel good.
1:03:16David Friedberg:The rich are fleeing they're jumping from state to state. Yeah. The middle class is worried about extremism. People that are left behind are trying to figure out, are they going right, left or or sorry, extreme right or extreme left? Which one do I jump in? America doesn't feel good. I think we got to make Americans feel good again. And that means looking at each other and being like, dude, I get it. I've done the work. I've tried to figure out what's going on here. I've got some ideas. Can we talk about it? That's the conversation. I feel like we're gonna have to leave out with like some fireworks and like a bald eagle flying across the screen and like an American flag I love it I'll chug a beer I don't think we have beer in here I might go to the bar right now and chug a beer I'm only drinking American beer tonight normally I drink German beer but tonight I'm drinking American beer makes sense happy 4th of July motherfuckers
1:04:14well thank you so much thanks for having me appreciate it hey it's molly if you enjoy our interviews check out our newsletter sorcery.bc where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews subscribe to sorcery today and don't forget to subscribe to the podcast on youtube spotify apple or wherever you listen link in description to sign up
1:04:41Thank you.
From the publisher
David Friedberg takes America's 250th anniversary as a starting point to ask where does the country actually stand? And how do the bottom 50% get left behind?
He argues the wealth gap is widely misunderstood, pointing to roughly $183 trillion in total US household net worth, compared to about $8 trillion held by billionaires and $4 trillion by the bottom half of Americans. His view is that the rich didn't take everything. Instead, the bottom 50% never got to own the productive assets that created the last 50 years of wealth, and.. as Friedberg puts it: "The truth is that the bottom 50% were left behind because of bad tax policy."
From there, Friedberg breaks down the policy decisions he believes created today's affordability crisis, including a tax code that taxes capital below labor, a Social Security system invested in Treasury bonds instead of equities since 1982, the shift away from pensions after ERISA, and government policies that drove housing, healthcare, and education costs higher. He argues those failures have created the conditions driving the rise of socialism in America.
"Americans should feel good about America. We just have to fix the policies."
David Friedberg: https://x.com/friedberg
Molly O’Shea: https://x.com/MollySOShea
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(00:00) David Friedberg, CEO at Ohalo Genetics & Co-Host at All-In
(01:11) Is California functionally bankrupt?
(02:28) The real reason Americans can't afford anything anymore
(12:13) Why a wealth tax is really government theft
(21:22) Why blaming billionaires is a political strategy, not a solution
(25:33) How Socialism grows like a virus
(30:40) Inside Trump Accounts: a 401(k) for every American
(34:22) Why rational arguments can't compete with viral outrage
(40:56) Jeff Bezos's radical fix for the wealth gap
(45:47) 5 years till Social Security is bankrupt
(46:35) Is AI actually coming for your job?
(50:29) The K-shaped economy
(55:39) Five things America needs to fix to survive
(59:21) David's research process
(1:02:54) "It's about making Americans feel good again"
