Balaji and Dan Wang: The Engineering State vs Lawyerly State

24:40You know, let me pause there. Yeah, maybe. I mean, I wonder, I mean, first I would wonder about your idea that Elon has defeated NYT. I think Elon has certainly defeated someone and that someone is himself. And I think Elon has been extremely adept at defeating himself. I mean, he got himself out of being co-president. How's Tesla doing? I don't know. It doesn't look great. How's X doing? I'm not sure. I think NYT is winning this round. But you think so? Okay, go, go, say it, say it. Yeah, I mean, I think that, you know, I'm almost mostly off X at this point, but I'm reading more on MIT. So maybe I'm not the target audience.

25:17Maybe I'm defeating myself. But I would also say that, you know, I think the only force that is more powerful than the USA, the only force capable of defeating the USA is the USA. And the only force capable of defeating China is the CCP. And I see that both of these nation states have become extremely powerful at beating the shit out of themselves. And I think these humiliating self-beatings will continue until morale improves. But I think that, you know, Biden did a terrible job. Trump is being kind of apocalyptic. And I think they have a good chance of unraveling the United States, yes. And I think the Chinese have been driving a lot of its smartest people, a lot of its most entrepreneurial people, a lot of its best creatives out of the country.

26:04And I think the CCP will also defeat the Chinese ethnostate. They'll defeat the great rejuvenation. So that's my model. I'll pause there. What do you think? Okay. So what I think is, I think Xi is a lot like FDR in the 30s, where he was the least bad in the sense of like there's lots of things. I mean, FDR interned the Japanese. FDR basically did the gold seizures. You know, FDR essentially pushed, I mean, he used the government against all of his enemies. He went after Andrew Mellon. He pushed the great fortunes into foundations. People credibly alleged that he, you know, pushed the Japanese into World War II and so on and so forth.

26:41All kinds of stuff. He ran for four terms, which broke all previous norms, blah, blah, blah. All kinds of stuff FDR did, right? People think he made the Great Depression great. He prolonged it. But net-net, when all the dust settled, ultimately, the U.S. was in the strongest relative position, and it screwed up the least. Yes. Not that it didn't screw up. Go ahead. Yes, go ahead. Right? It screwed up the least out of the Soviet Union, which has gotten killed, Nazi Germany, which has gotten itself blown up, the Japanese got nuked. The U.S., both through competence and through luck or whatever, screwed up the least out of them and was therefore the most powerful in that dispensation.

27:22And I think China's big instinct because of the century of humiliation, you know how like a great founder will take a lower valuation, but always preserve control, right? My view, and you can probably fill in the gaps on this is, especially also seeing what happened to Japan with the Plaza Accords in the 80s, right? Lots of people, our friends will say something like, oh, you know, people were saying Japan was going to beat us in the 80s and therefore it'll happen exactly like that and we're going to beat China the same way. But Japan didn't just lose. It was basically killed because it's like a U.S.

27:57occupied country, right? There's a military base there, you know, thousands, tens of thousands of troops. Japan's constitution is written by the U.S. And most importantly, Japan's not a sovereign. One way of putting that, in 2017, actually, NYT released an article that said in 2010, China had killed a bunch of American spies in China, right? Japan can never do that. That means China has deliberations that America can't see in a way Japan couldn't. And so Japan, with the Plaza Accords, it was handicapped, it was forced to buy U.S. treasuries. Its whole decade of stagnations began at that point.

28:28And China's hyperconscious of not going through that. So China, at all stages, it took less money to preserve more sovereignty. It took worse terms in some ways to preserve, right? So because of that instinct, that wall building, for example, it took all these hits when it banned foreign social media and it built its own, right? All these PR hits constantly, and it was willing to do that to preserve sovereignty. I think that's going to end up being the farsighted decision, for better or worse, in this century. For example, you see what happened with Ukraine where they're scripting drones on Russian soil?

29:01No, what does that mean? So, like, a few months ago, the Ukrainians managed to, like, have some exploding drones activate within Russia and go blow things up, right? So they could control things remotely, right? So in my view, that means, and I talked about this actually 12 years ago, but now it's actually becoming real. Digital borders and physical borders are like the same thing. The great firewall will be seen in some ways as a very farsighted thing because it is digital hard borders. People won't be able to script drones on Chinese soil. They won't be able to script humanoids on Chinese soil.

29:39They won't be able to also send in destabilized memes, destabilizing memes into Chinese soil. Right. Whereas the unmoderated anglospheric internet will just be filled with all of these scissor statements and crazy things that are all driving everybody crazy as we're seeing. Yes. And so China is also insulated against that because people only speak Chinese. So and Xi is taking English out of the schools. So they've got like multiple levels of firewall and they can just like sip green tea and everybody is shooting each other, you know, in other countries as the dollar goes away. I think that is a reasonably compelling idea.

30:17I think that... I have a solution for this, but go ahead. I feel like the Chinese are... They've really taken Napoleon's maxim to heart that the game goes to he who does not lose. Now, obviously, Napoleon... The do-nothing-win meme. Napoleon won nearly all his battles, but he just lost Waterloo and a couple of others, right? And then he lost, and he lost badly. And so I think the Chinese are very intent on not losing. And there is certainly some good things that I see that the Chinese are doing. I mean, I agree that the Great Firewall, in retrospect, looks like a good decision. You take a lot of PR hits.

30:57But as I wrote in one of my letters, it becomes really difficult to say that the Chinese really wanted the Internet in the late 2010s, when Congress was regularly dragging Zuckerberg and Twitter and everyone else into Congress to say, your products suck, you're destroying us, you're killing us, man. And so, you know, I think like you can't tell the Chinese you really need these products in your state. And I think that makes a lot of good sense. I take a look at what is going on with AI today. You know, last week we have Sora 2 and we are able to produce like hyper-realistic slop that like friends have told me that their family members were not able to distinguish that this was an AI-generated cameo, right?

31:40And I think that's kind of incredible. Like, why are we so focused on releasing this stuff? And this seems like crazy decisions being taken by the AI labs without any real consideration for how the state, how the people might actually use it. And so, you know, there is a sense in which I think that China just wants to be totally stable and then, you know, close the doors in the celestial empire and then let the barbarians tear each other apart and eat some mochi balls and then drink green tea. Yeah, I mean, that sounds good. But I think that there is a problem here, which is that the only force capable of hurting China is the CCP, which, I mean, in my book, I write about how they had zero COVID and they had the one child policy in which they were really dumb and they were really autistic about thinking in such literal minded terms.

32:31Oh, there's going to be ecological doom if we have overpopulation. The solution is one child per couple and then, you know, conduct 300 million abortions over this period. Or, oh, you know, we don't care about people who need chemotherapy or need dialysis treatment. The only thing that we care about is preventing the spread of the COVID virus. And so we are going to, you know, prevent the spread of the virus at all costs. And so here is where I think the engineers with their literal mindedness will not be able to leave the people alone. I think the best case scenario for China is if the CCP decides to spend all day sipping green tea and then just leave the people alone.

33:12And I don't think they're going to do that. I think they're going to figure out new and novel ways to destroy the country themselves. What do you think? So it's interesting because I want to make the case for China and then I'll make the case against China. right but that's to say um let's say there's like v1 v2 v3 v4 of an argument you know i mean i think maybe you and i are on v4 but let me let me let me do the v1 v2 just get to our progression right because you go to undisphiscate arguments you get a sophisticated one right okay so the v1 is kind of the naive like that's a chinese communist party they're you know and people think they're all maoists and it's slave labor and so on and so forth and that's also that's a or that's still the ideological mouse.

33:54They've got a very outdated view of what China is. They see the Chinese cities and their response is, oh my God, there's LEDs on the cities. They don't realize the point is the cities didn't exist 30 years ago, right? And they're actually very clean and beautiful or whatever. Then the V2 is, I'm not attacking him, but let's say somebody like Arnaud Bertrand on X, right? Or Carl Zha, which is basically, you know, I welcome our new Chinese overlord. Someone will say something like that, right? And it's like their case is something like America's been blowing up the Middle East. China's been building up Africa.

34:26America just has a bailout economy for the wealthy. China has shared prosperity for everybody. China hasn't started any wars. America's starting all these wars. China's internally united. America's are totally divided. And actually also with these tariffs, China's been doing trade deal after trade deal. And by the way, that also is why I think Xiaomi or, you know, BYD, DGI, their market caps will probably rise because Chinese market access has expanded as a function of all these trade deals that, you know, Xi has recently inked as a function of the reverse thing on the tariffs. Okay. Then the V3, so that is like the first is, you know, USA is still 1945, it's going to win, China sucks.

35:06The second is actually China's super strong and it's good, everything will be fine. The V3 argument is basically the U.S. was on balance better than the Soviet Union from 1945 to 1991 but then after it won it became by degrees worse and worse and worse behaved and started bombing people and abusing its power and so on. And one way I think about it is at home, China's a one-party state, but abroad it's a two-party state because it's checked by America. Conversely, America at home is a two-party state with Democrat-Republican, but abroad was a one-party state where it blew up everybody because it wasn't checked.

35:42It's an interesting way of thinking about the last 30 years or so, right? And now America's coming home because, you know, it's the national defense strategy, if it's real, says pulling troops back from Asia, like it's becoming a country, not an empire. It's giving up the imperial burden, like the end of the Soviet Union. And so the bad part, the V3, is China will expand in such a way that it actually has unchecked power. And even, for example, zero COVID would never have actually been undone in China without the signal from other countries. Because the Chinese diaspora knew that zero COVID wasn't working elsewhere, because other countries were, you know, that external signal was certainly filtering into China in some ways.

36:22And people were aware that Chinese people didn't have to live like this. And that was part of the signal. I think another part of it is Xi just wanted to win his re-election in 2022. And zero COVID was sort of a way to winkle out anybody who wasn't super loyal to him. And then right after, you know, I think the November 2022 Congress, then they unlocked everything. So it wasn't really about zero COVID. It was about third term. or fourth term, whatever, you know, and the term. And so then the V4 would basically say, okay, the USA is going to zero. It's not 36 trillion debt, it's 175 trillion debt.

37:01The dollar is being devalued against gold. It's dropped by 100 million X against Bitcoin. It's pulling back its troops. People are shooting each other domestically. It's telling NATO to go fight for itself. It's basically sanctioning itself on trade, essentially withdrawing itself from world affairs. It's like, you know, have you seen a steel cage match? Yeah. Yeah. So imagine, I imagine like a new iron curtain, like a steel cage UFC octagon thing descending over America. And all talent is told, go home. All the researchers are told to go home. All the wealth is getting, going to the internet, where it's S &P 7 or the digital asset treasury companies.

37:38S &P 493 is flat. U.S. treasuries are down to zero. And conversely, all the manufacturing and military is in China because of the robots and drones there. and all the media and money is on the internet. And now North America is just this gigantic steel cage match with all the shouting and all the shooting. And it's like basically what the Eurasian continent was under communism, unfortunately, in the 20th century. All kinds of crazy people shooting each other, warlord era, collapse of the Soviet Union, Tajikistan Civil War, all that kind of stuff. I think it's coming to North America. So in the V4 is basically, okay, in that world, something needs to balance the Chinese drone armada.

38:13because China will be insanely, insanely, insanely, insanely, insanely powerful. It'll be like 5 or 10x America at its peak. It will be because it's actually hitting more steam. Chinese overproduction just means like so many widgets popping out of, you know, the ground. They're still gaining steam, right? Like the country still hasn't been fully developed. And so China will just be the most powerful physical force to have ever existed. And right now, many Americans aren't mentally living in that world because they still think like the U.S. military exists, right? But the U.S. military is being, unfortunately, beaten by the Houthis.

38:46NATO is being beaten by Russia. If NATO can be beaten by Russia to the point that there's peace treaty talks with Putin, China is like 10x Russia easily. You know, Hegseth has said Chinese hypersonics can sink all U.S. aircraft carriers, right? The Secretary of the Navy said one Chinese shipyard makes more ships than the whole U.S. Navy combined, right? Raytheon's CEO has said you can't decouple from China. So what can possibly balance the Chinese drone armada? I think the entire American mentality of like fighting with your fists and so on and so forth is a very romantic 20th century thing that can't be done against China.

39:18So you actually need something totally different, which is Gandhi and nonviolence, decentralization, agility, invisibility, something totally, totally different against this enormous force. So that's where I'm at with like V4. Let me pause there because that was a lot. But let me get your thoughts. Yeah, I think my problem is that I'm on like V73 and it has a remarkable convergence with V1. And I think I've kind of horseshoed my way back into the start of the snakes and ladders. Sure. I think this is, I think, I mean, you're right that there is kind of this negative element with both of them. And this is where I would think about how you say that MAGA was appealing to the gays as Americans rather than as gays.

40:04I think there is something to that. But there is also, you know, MAGA is also very interested in defining who the internal enemies are. And probably they're throwing, they would like to throw more of the gays in jail. In 2025, yes. In 2024, it was a very different message up until the election. And then it shifted 30, 40. Yeah, go ahead. Well, I mean, when you hear these terms like heritage Americans, first I think of like when you say heritage American, I think of like a giant Thanksgiving dinner that's with a big turkey in the middle. And, you know, I think that it's just these very strange sort of terms.

40:40I agree that there is kind of this iron curtain that the Americans are self-imposing on themselves. And that feels really strange. And maybe it's good for the troops to withdraw from the rest of the world and give up the imperial burden, but I think it's not good to deport a lot of South Korean engineers, or let's just call them Korean engineers, who are trying to build heritage Americans. That's right. And humiliate them in chains. That is totally a horrible own goal. I'm just always very conscious of the ability for the Chinese to impose own goals for themselves as well. You know, it would be great if they spent all day sipping green tea, but they can't leave anything alone.

41:22And they just constantly have to meddle in everything. Is America Keynesian? Yeah, sure, maybe. But the Chinese are, according to Adam Tooze, just so much more Keynesian. They Keynes everything, right? And I think that there is kind of just this endless meddling mentality. Now, let me just make a broader point, which is that I think the U.S. and China are in competition. and rather than one country having all of the structural advantages on its side, I think I wouldn't agree with that characterization. I think that the U.S. can very credibly point to these amazing strengths that the U.S. has. I think China can also point to these amazing strengths, namely these drone armadas, which are very powerful.

42:00But there's also, if you wanted to focus on the most ugly parts of America, you can definitely paint a horrible picture just as the same with how you can do that with China. And so my mental model for all of this is that this is a long-term competition. There will be no country that completely implodes and fails to get back up in the way that Gorbachev did really kind of drive the Soviet Union. Okay, so that's a big difference of opinion. Finish your saying and I'll say something. Go. I think that, you know, when one country is ahead, it is going to get overconfident and make a lot of mistakes.

42:33because I felt like I lived through this in China when at the end of 2020, at the start of 2021, Xi Jinping felt like he was at the top of the world. He was able to control COVID in which, you know, the U.S. was not. January 6th just happened and China looked like it was like a super stable, economically prosperous place. What does he decide to do? Smash a lot of tech companies, destroy the real estate sector, and then also hold on too tightly to COVID. I think that is a classic mistake of overconfidence. and arguably... But was it? But was it? Because let's analyze it now from 2025. Okay, go ahead.

43:08The three red lines essentially were sort of a controlled demolition of the real estate bubble. It didn't actually fully crash the economy. He went after the video games. He went after after-school tutoring, which there was a red queen phenomenon after school. He definitely hit all kinds of people, you know, entrepreneurs and so on. But advanced manufacturing, the transition into it did work. I know you mentioned the little pinks in your book say this, but maybe they're actually right because he avoided the fire economy, you know, finance, insurance, real estate of the U.S. He avoided going too far into it, popped it, doesn't seem to have, it caused some damage.

43:46I mean, one way of thinking about it, if the country, you know, rather than talking about it in very ideological terms, if the country is like the platform and the companies are like the apps on that platform, right? Sometimes Zuck will make like a breaking change to the Facebook APIs and break Zynga, for example, if you remember when they did that, right? Because it was spamming the feed too much. Nothing against Zynga or whatever. You're just making that decision, the greatest good for the greatest number. Like Zynga is working in its own way, but long-term, this is spamming too many people with zombies or whatever it is.

44:20So actually, no, we don't want to have Zynga. We're going to push Zynga into its own archived inbox, like a spam inbox and so on and so forth. And so in the same way, if he's got root over the Chinese platform, he's like, actually, we don't want these apps. We don't want any more than we want the advanced manufacturing stuff, which seems to have worked. Yeah, I mean, if the only thing that matters to your economy is advanced manufacturing, and I am going to let no one talk me down from my stance that manufacturing is almost everything. And so I think that manufacturing is really important. But, you know, he didn't only hurt a lot of the video games.

44:53And maybe, yeah, you should control the video games. You should control the social media. You should control the short-form video apps. You should control the AI slop. Frankly, the Americans ought to do more on all of these different things. He also smacked around people like Jack Ma, people like John King. Yeah, real guys. And other people, right? And so that's pretty important, too. And so this is where I think that it is still important to flip a few more pages past the business pages of the Wall Street Journal into the economics pages because youth unemployment is real. Tomping is real. You talk about inflation being, what's the Friedman line?

45:26inflation is a taxation. Inflation is taxation without legislation. Without legislation. And I think, you know, yeah, inflation is bad. But the only thing that might be worse than inflation is deflation, which the Chinese are not quite able to get out of. And C is kind of this boomer who says, why do people dislike deflation? Don't people like lower prices? Well, not if you are an investing company. Well, so here's where I want to argue with you. Go ahead. All right, well, let me just make one more point, which is that I think that, you know, the country that's going to be ahead is going to make all sorts of mistakes driven by overconfidence and hubris, which is what I think, for the most part, she did.

46:01I think that the controlled demolition of the property sector destroyed a lot of confidence in housing and construction activity is still not back. And we still might get some sort of a weird financial crisis because of the supposedly controlled demolition of the property sector. I think that this was not as controlled as we'd like to believe. And arguably, you can say that the United States grew overconfident, which is how it imposed this octagon upon itself to make people destroy each other, that's a mistake of overconfidence. But the more that you're ahead, the more you'll make these sort of mistakes, the more that you're behind, the more that you're interested in patching up your deficiencies, which is why I think this is going to be kind of a neck and neck race for a very long time, because we can't just look at a race based on structural advantages.

46:47As it goes on, you know, people will trip up and stumble and fight harder. Okay, so here is my worldview and where I disagree with you on is basically a few things. First is, I don't know if the U.S. has that much longer to live as like a coherent political entity. I think we're on the verge of a end of USSR type scenario. Dalio describes it as a debt heart attack. Elon thinks the government isn't going to last very long. you're seeing gold flipping U.S. treasuries. For example, if you saw that graph, gold is flipping U.S. treasuries as reserve asset of states. And certainly Bitcoin has risen more than 100 million X against it.

47:26There is, you know, the U.S. has not become the, like the U.S. used to be the number one destination for global millionaires up to 2019, plus 10 ,000 millionaires. After 2020, it dropped 85%. It hasn't recovered. And global millionaires capital has relocated to Dubai and Singapore, number one and number two. They've left China as well, a good chunk of those millionaires, but China regenerates them so fast that it's basically seemingly fine for them. And China's view, I think, is that the new up-and-coming generation of 20-somethings speaks purely Chinese. They have purely Chinese apps. They'll be Chinese nationalists.

48:04And unlike the 40-somethings that have some sympathy for the West, a lot of these Gen X or older millennial entrepreneurs is like, you know what, why don't you guys go and it's fine. Jack Ma can be a teacher in Japan or something like that, what he's doing and somebody else in China can run that. We've got a billion Chinese people here, right? That's essentially Xi's bet that he can do without these sort of older Chinese entrepreneurs. And now he just wants those, the younger ones who have grown up on Xi Jinping Thought and all the Chinese apps and think China's number one and Luckin is better than Starbucks.

48:40And maybe they're right. BYD is outselling Tesla in neutral markets. Xiaomi is able to ship a car when Apple wasn't. TikTok needed total state intervention. And the combined efforts of Google and Facebook and so on and so forth couldn't beat TikTok. And DJI is the cheapest and largest scale drone manufacturer in the world. And an end-to-end, you know, like essentially, the U.S. can't compete with China abroad, with the exception of maybe Elon, and even Elon is having a tough time. In any neutral market, Chinese products win. And so the U.S. has retreated to just trying to tariff and build tariff barriers around the U.S., which is going to fail in the medium to long run because the Democrats may defect from that.

49:19Like Newsom has said, hey, maybe he'll import goods from China if he saw that. Right. Like that's why I say America, it's not the United States, the dis-United States. Blue America has its own foreign policy distinct from red America. And Newsom and Walls and Hillary Clinton have all signaled that they may want to align more with China than the Republicans do. Like, you know, you saw the thing with Newsom and how it wasn't just that they cleaned up San Francisco for Xi. It was that Newsom was the only Democrat to get the meeting with Xi. Do you remember that? Yeah. My view on that is, again, a lot of Americans don't know this, but like within China, you can't just jump straight to the presidency like Obama or Trump.

49:57You have to go from like, you know, mayor of a village and then governor of a province and all the way up and you make it to the central committee. And so Xi recognized Newsom as having a similar path going from San Francisco mayor to California governor to possibly president. So recognize him as a credible, possible person. And when Newsom was in China, he said he wants to be China's long-term stable and strong partner. My view is that after the dollar ends, that's the last strand that's holding blue and red together. Because blue is only 4 % of Democrats marry Republicans. Democrats certainly don't vote for Republicans.

50:32Democrats don't even talk to Republicans anymore. They're in their own blue sky versus X, you know, kind of thing. Digital secession is already here. They're now starting to shoot each other, blow each other up. There's a new killing, crazy blowing up thing on X every single day nowadays, unfortunately. And it's the last piece of paper that's holding this thing together. It's not, you know how people say it's not a, it's a country, not an economic zone. You've seen that kind of post on X? It's actually an economic zone, not a country. Because the only thing holding it together is this piece of paper called the dollar.

51:03And when that tears, unfortunately, there's nothing keeping blue and red together. And Democrats will side with Xi if they don't have D.C. Yeah, well, I don't know. I mean, why would Xi want to meet Governor Newsom? This is a guy who looks exactly like the lead actor in American Psycho. If this came to his interest to me, that's just weird. And I think there is someone who is more willing to give a bear hug to Xi Jinping than Governor Newsom. And that is President Donald Trump. I mean, I was digging up these quotes for an article I was writing, which Trump told the Wall Street Journal, Xi is so smart, brilliant, everything nearly perfect.

51:42There's no one in Hollywood like this guy, as if Xi Jinping had Tom Cruise levels of handsomeness, which I find not. But Trump is unpredictable because he'll say that about someone, then he'll insult them, then he'll come back and say it. Well, right now he's trying to bear hug Xi Jinping. And so, you know, I think you're right. I mean, maybe there is more than one thing that unites Democrats and Republicans. That's the paper. Rather, it's like a love of Xi Jinping. What do you think about that? What's interesting is a few years ago, people were saying that one bipartisan issue was being anti-China, right?

52:14My view is Democrats were only anti-China because there was a contestation for who would run the most powerful state. Like, basically, first China disrupted manufacturing, so it disrupted red America. Then, post-2020, it seemed to become the most powerful state. So then Blue America really fought it. And now recently, finally, Tech America, which always had a sense of superiority versus China, has finally started to see, wait, Chinese AI models are actually giving us their own for the money. Chinese robotics are actually really good. And for the first time, Tech America is actually taking China seriously, not just one-off like TikTok, but actually, whoa, actually the Chinese engineers aren't just copycats, they're actually innovators and so on.

52:53That's always been the thing which tech is, you know, American tech has felt they've had the edge. and now that edge is maybe slipping.

53:02So I think, though, at almost a genetic level, I think red Americans at the base, not Trump, have a more visceral aversion to China, whereas Democrats, it's funny to put it this way, this is a one-liner, okay? But Democrats and China are both natural communists, so they'll be, that's a joke, okay? But there's, you know, they're statists, right? Democrats are willing to be administrators in a multi-ethnic empire. And so they could find something under the Xi dispensation. Sort of like, you know how Venezuela is like this dysfunctional kleptocracy, but it's sort of bailed out with Chinese goods.

53:39China's willing to, as you know, it's willing to work with, you know, Iranian fundamentalists and Singaporean meritocrats and Venezuelan kleptocrats and Russian Orthodox, so long as they don't interfere in China's internal affairs. Right. And so I think they will support the Democrats and just ship them goods and support them in this way. Have you seen this thing on soft secession that the Blues are doing? Right. Right? So in that soft secession, they just get goods from the West Coast ports, from China. They don't enforce the tariffs. I think it's very likely something like that happens. Newsom has talked about it.

54:16I'm not even inferring this. Go ahead. I don't know. Biden Democrats, this guy from Delaware, another potential port town. There's a port of Philadelphia. Didn't get a lot of didn't do a lot of good for Joseph Biden when he was president. And but but Biden Biden is 19 born 1942 and Trump's born 1946 or something like that. So they're actually both of you zoom out. They're both like, you know, coarse, handsy guys from the northeastern U.S. born at the time of like peak America who grew up thinking the USA is number one on everything effortlessly. And Biden would say things like, we're the United States of America for Pete's sake.

54:52Like essentially they just think USA number one. Go ahead. Yeah. I mean, I think the, I mean, look, you're focused on a lot of weird shit happening in America. And no doubt the weird shit is real. But I am living, I'm speaking to you from San Francisco. I look out the window and I see three weird pieces of shit a day before breakfast. You know, that's just how odd things are. But if I am trying to think a little bit about China as I looked at, there's plenty of dissatisfaction. I don't know if they're regenerating all the millionaires very quickly. You know, there's a lot of this, when the biggest driver of wealth in China is the property sector.

55:30When you have a property sector collapse of 25 % and then people aren't really buying homes, it's really hard to build more wealth after that. There's a lot of uncertainties about the corporate sector. There's a lot of young people who've decided, to move to northern Thailand where they could smoke drugs that are legal in the state of California. And they're taking leave of, you know, the great rejuvenation of the Chinese ethnostate that's being undertaken in their name. And all of these millionaires are leaving. And there are, I mean, I don't think the, definitely the demographics is not an issue in the next 20 years.

56:00But in like 25, 30 years from now, demographics will yawn larger and larger. It seems like they're not going to be able to escape this hole very well. I understand they're deploying a lot of robots, But what if, you know, the Silicon Valley bet is real, which I don't really buy. But let's say we invent God in a box and we get the super intelligence and they invent all these humanoid robots. And then we get to take control of these humanoid robots because we have the AI and they don't. You know, that could be bad. You know, maybe finally all of this AI slop, we should just consume all of the Sora 2 videos just to support, give OpenAI a hand so that they can take charge of the robots later.

56:38And, you know, the Politburo seems pretty dysfunctional. Xi Jinping, you know, I know, I get he's like more handsome than Tom Cruise, but he has a belly. I don't think that, by the way. I think that, you know, he's smoking probably too much because, you know, Xi was born in like 1952. And all of these people smoke way too much. If he falls over one day, are we going to get tanks in the streets in Beijing? I don't think so. I think they'll have an orderly transition. But what are we really going to get? And so I think there are all of these, you know, disunited Politburo comments that we can also have as soon as this guy keels over.

57:12And so, you know, I don't know. It's like, I think that the tariffs will be enforced. It's more likely for the tariffs to be enforced on California than for the Chinese somehow to figure out all of their own political problems too. What do you think? I think Li Chang is very competent, and he is potentially the number two after Xi. I think very few Americans even know who the seven, I'm sure I'm butchering the pronunciation, but it's like L-I-Q-I-A-N-G, I think. Yeah, and you know who this guy was? This guy was the party secretary of Shanghai during the worst lockdown ever attempted in the history of humanity.

57:44Every other democracy was able to toss out the bastard who enforced COVID on their policies. And then what did the Chinese decide to do? Elevate this guy into Premier. That's weird. Wait a second. But Trump was the one who did COVID lockdowns in the U.S. and he's president again. Right. So I'm not sure. I'm not sure that's true. Well, but yes. I mean, Republicans ultimately didn't care that much about like COVID is a very complicated kind of thing. because everybody switched positions on it like four times. Like at first, Democrats said it was racist to talk about COVID and Trump was calling it the China virus.

58:19It's Jan, Feb, 2020. And then Trump started saying, oh, okay, you know, we need to start, you know, covering up the testing and showing, you know, that the numbers going up. And Democrats started saying it was a big deal. Then Democrats flipped in the U.S. and said, actually, racism is a real pandemic and we need to go and do Black Lives Matter riots. and Trump was doing the warp speed vaccine. And Kyle Mahara said that she wouldn't take a Trump vaccine. Then, and the vaccine was actually blocked. People said that they were, you know, I think, gosh, I forgot this guy's name, but there's a scientist.

58:52There's a report in like MIT Tech Review that they were blocking the vaccine's approval until after the election to make sure Trump didn't get a bump from the vaccine, which is a big deal, by the way, because it's a close election to a tree. Then after the election, suddenly the vaccine became a tool in the hands of the Democrats. And fundamentally, I just looked at that as something where it wasn't a scientific issue. It was just something that was a tool in a power struggle. And similarly in China, I think it was just a tool for Xi to get his third term. It was just that. I don't think they actually believed in it.

59:26Well, let me give you an alternative view. But first of all, let me say that, you know what the Americans got and the Chinese didn't? The vaccine. the mRNA vaccine. Yeah, sign of a farm didn't work, right? Pretty important. I mean, the Chinese were locking people up and swabbing their noses and mouths, you know, every other day. And they did not do the vaccines, which is really, really strange. They were just using police to keep shutting people in. I think that after living in China, after living in Shanghai in 2022, what I observed was that, yes, politics was part of it. Xi's coronation. I feel like Xi felt like he had the coronation in the back.

1:00:07And he did the most blatant possible insult towards the Shanghainese by elevating their most hated politician into the head of premier. And I was surprised that, I would have been surprised if Li Qiang was still vice premier, one of the four vice premiers after this. And then he was elevated to be premier. Think about how that distorts the incentive structures of all of these other party secretaries who thought this guy messed up big time and he gets promoted. I was living in China and I felt that the protesters did play perhaps some role in showing Xi that they are dissatisfied. I was living in Shanghai.

1:00:41I went to one of the protests the day after that. All of these youths staggered out of their cocktail bars and, you know, started chanting down with Xi Jinping, down with the Communist Party, which is kind of. Yeah, that was very unusual. America is very unusual to see that because usually it'll be something where they're just critiquing like a local party person versus the big dog or what have you. It's not their fault. They had too many of these Western cocktails in the French concession. But I think the other big thing was that I felt very strongly that the local governments everywhere throughout China, especially in smaller cities that are not as wealthy as Shanghai, they could no longer enforce zero COVID.

1:01:19They had just no state capacity to do onto Shanghai what Li Tiang did onto Shanghai. And they had given up. They were really exhausted. And I think when the virus started really spreading in Beijing, the central government took a look at itself and said, can we, the central government, enforce a lockdown upon the central government? And then they decided no and threw up their hands. And then they completely let this whole thing collapse. Yeah, in 2023. It sounded like a mistake to me. It didn't have to happen this way. Because you know what they didn't have? Vaccines. Yeah, the Chinese vaccine did not work.

1:01:51So I'll agree with you on all of that, basically. And I know that the Shanghai lockdowns were actually like seriously house, you know, like house arrest type things. And people who were zillionaires or whatever were literally locked in their house and people like had pregnancies messed up, all kinds of bad stuff happened during that time period. So I will completely agree with you. I don't think China gets everything right at all. I just, however, think they're messing up less. And the reason I say they're messing up less is if you take a flight from San Francisco or Seattle or L.A. or any Western city which has syringes and refuse and drug addicts on the street and people attacking you as you walk down and so forth.

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