David Friedberg: The US Empire Is Declining And Socialism Is Coming Next!

20:50David Friedberg:well, you now have a right to accumulate things. You now have a right to build value, to build wealth, to build a house and have your family in your house and have all these things. That was the principle of the United States. I'm all for taxes when people transact, when they turn their stock that they've held for a couple of years into cash and buy something with it. Boom, tax, you get taxed on that. If that's the right model, that's when you should get taxed. Right then, when you're able to turn that asset that you own into another asset. So that's what we do today. That's an income tax or a capital gains tax.

21:19David Friedberg:like when you realize that gain. But if I go into your shares and I'm like, hey, I'm going to take 5 % of your shares, what are you losing? Well, you can't use those shares to buy anything because as soon as you try and buy something, you owe tax on those shares. So by taking away your shares before you've actually transacted with them, before you've actually sold them, or taking away your private property, your home, or giving the government the right to come in your garage and audit everything you own and say, hey, this year we're doing a 2 % tax. That is antithetical to what the United States was founded on, which was a founding principle of private property.

21:48David Friedberg:Now, if your property goes up in value and then you eventually turn it into some other property, that's a transaction and that's when you get taxed. That's how the system is set up. So if we have an issue with people having too much wealth, that's the moment to increase the tax rate. That's capital gains tax, income tax on high earners. Those two things can get you 97 % of the way there. And you're not really going to gain much. you know separately we can kind of talk about the numbers on this but like tax the rich all for it but tax the rich when they transact when they sell when they when they have a capital gain if they borrow against their assets this is another thing that's that's wrong about our system today if i'm very wealthy i own a bunch of stock and i've never sold any of the stock if i borrow against my stock to go buy a yacht i don't pay taxes that should be a taxable event we should fix that.

22:36David Friedberg:That's an easy fix in the tax system. I'm not taking away your private property, but as soon as you borrow against that, it's effectively like transacting on that property. So that's a moment to pay a tax. And if we think that the rich aren't paying enough taxes, you can raise income tax or capital gains taxes to get them to pay more. This is what I was going to say, but you arrived at it was most people that own stock in big companies will just borrow against their stock and they never pay a tax. I didn't know this until I I'm going to say 26. And my company had gone public. And this bank in Europe approached me and said, by the way, we'll give you 20 % of whatever the value of the stock you have in my company called Social Chain AG is a tax-free loan.

23:17I was like, explain this to me again. So you'll just send me millions of pounds and I don't have to pay tax.

23:22David Friedberg:You don't have to sell your shares. I don't have to sell anything. I said, well, look at the rest of my portfolio. And I had some Facebook stock at the time. They're like, well, we'll give you 50 % to 60 % loan to value on that. i.e. if you have a million dollars of Facebook stock, we will transfer you today 700 grand tax-free. And I can do with that whatever I want. And I thought, fucking hell, this is what the rich do. That's exactly right. And the truth is that no one talks about behind closed doors, everyone knows that it needs to change. But no one wants to say it because... I'm saying it.

23:50Yeah. Gotta change. What's interesting about that is say that I have 10 million of Facebook stock and I take a loan and they give me 5 million in cash. What a rich person then does is they take that 5 million and then they go and buy other assets. Exactly right. And then they start acquiring more and more assets.

24:03David Friedberg:That's what's unfair about the system because then when you have capital, you're accumulating more capital. While labor, if you haven't made that cross that chasm from labor to capital, you're still here grinding every month, grinding every week, trying to pay your frigging bills. And then these guys have all these shenanigans that are going on. Yeah. It is wrong and it needs to be fixed. The answer though is not taking private property. Yeah. As soon as you start taking private property, those gates are open. By the way, it's not even going to be constitutional in the United States. The Fifth Amendment has this taker clause.

24:32David Friedberg:You know, it's not it's legally like not going to win in federal court. It could work in some states, some states. There's seven states that actually have a constitutional ban on private property tax like this. There's, you know, 43 states where it's game on and we'll see how they play out in the courts as they try to pass these wealth taxes as well. But these are asset seizure taxes. You can have a wealth tax by raising capital gains, make high income or high asset people pay more taxes or whatever when they sell stuff or when they buy stuff. There's a lot of ways to tax wealth. But taking assets from people after they've paid their taxes or before they've paid their taxes is not the right way to do it.

25:09David Friedberg:What will ultimately happen? So the ultimate outcome will be that 51 % of people will say, hey, give me all the stuff that the 49 % have. What would stop them from doing that? Because ultimately you can take as much as you want from a minority of people and distribute it to the majority. and that minority starts out with a few billionaires, then a couple more 50 millionaires, then a couple more 10 millionaires, then millionaires, then 100 ,000aires. And there's no limit to where this thing goes. And that is socialism. And what does that do in terms of how talent moves and how people move to different places?

25:44David Friedberg:I know billionaires. Yeah. Many of them have moved or are planning to move out of California, just on the thread of this. And people say, F them, good riddance, get rid of them. You know, the top 1 % of taxpayers in California pay the majority of taxes in the state. I think it's probably, it's definitely north of 40%, but it's probably the majority. The top 1 % of earners pay 40 to 50 % of California's total personal income tax, depending on stock market capital gains performance. There you go. So that 1 % are the people I'm talking about that are leaving the state because they see where this is headed.

26:18David Friedberg:I don't think California wants that. Those are very productive people for the state. They're people that create companies, that hire people, that pay well, go to fancy restaurants, pay for cars. I mean, they support the economy. It's not just the taxes, but they're a big part of capital flowing through the economy. We saw this happen in France. You know, France had this wealth tax, and then their total tax revenue declined by more than they were making on the wealth tax because everyone left France. Then they stopped doing the wealth tax, and everyone came back, and the income came back. So this is a well-studied kind of case.

26:49David Friedberg:So I don't think that a wealth tax or an asset seizure tax is the solution. I think we've got to fix all the other stuff that we've talked about, and we've got to fix the government spending problem. And if we can do those two things, then I think we can bring inflation down, we can bring the wealth inequality down, and give more people the ability to make that transition. But I do think every politician should be talking about the focus on what percent of people in the United States every year are moving from labor to capital. How many people can say, hey, I've got enough cash to retire if I wanted to?

27:16David Friedberg:That's what we want to try and get everyone towards. not just convincing people, and this is one of the great lies, convincing everyone that the great American dream is to own a house. When owning a house for a lot of Americans ends up putting all your capital in one asset, and you've got to basically get the price of housing to go up every year to keep everyone moving up the ladder. So now, fast forward 30, 40, 50 years, young people can't afford to buy a house anymore, because we've pushed the asset value up so much to try and make sure that everyone's got good household wealth. We are told that.

27:44I mean, that was the sort of central idea once you leave university is to figure out how quickly you can get a mortgage to buy a house. Great lie.

27:49David Friedberg:It's one of the great lies. And there's a lot of countries where people have been able to accumulate capital and jump that ravine from labor to capital much more quickly when they don't buy a house because they can invest in stuff. They can buy, you know, the S &P 500, which you can just buy on an E-Trade or Robinhood account and you can just own it, on average will make you 10, 11 % a year. You just put your money in that, you're making 10, 11 % a year and it can go up every year. You don't have to pay taxes. You don't have to pay property tax. You don't have to pay insurance. You don't have to deal with repairs and maintenance, all that sort of stuff.

28:17David Friedberg:So a lot of people would have been better off, depending on the markets that they're in, there are some markets that ballooned, but a lot of people would have been better off over the last 30 years actually owning the S &P 500 than owning their home and paying for the rent on a home. One of the things I see in the comment section whenever someone makes that point is you'll have someone who bought a house 20 years ago saying, well, listen, I bought a house 20 years ago for this amount and now it's worth this. And this is every single time that I see this argument being made from financial advisors or investors, that is always the top comment is, well, I bought one and I did good.

28:51David Friedberg:Yep. It actually indicates a problem, which is if your house went up in price so much, that house is much less affordable to a young person that's going to buy it next. And that's what we've fundamentally done with this asset class, residential real estate. We've created a system whereby residential real estate prices go up so much, and there's a whole bunch of policies around making this happen. I've got a graph here showing all the things that have gone up, and you can see housing is one of them. Yeah, the stuff on the bottom, the government doesn't touch. The stuff on the top, the government touches.

29:21David Friedberg:And so the more the government's involved, the more expensive these things get. But all of the policy around residential real estate has allowed the middle class in America, which has the majority of wealth, and I'll give you the statistics in a minute, to grow their asset base, to accumulate more assets, to become wealthier. All the boomers, they're so wealthy because they owned all these houses. And now young people graduating college can't afford a house. It is a bad fact that a lot of people got very wealthy by owning a home because it means that the next generation is going to say, I want socialism because I can't afford a home.

29:52David Friedberg:That's the moment we're in. 40 million Americans graduated from colleges in the United States in the last 10 years. 45 million. So if you do the math on this, that's a large number of people that are now, on average, encumbered with some amount of student debt, facing a challenging job market. And then the only way to buy a home is you've got to come up with a million bucks. And, you know, it leads to this problem where everyone's like, man, I need Mom Donnie. So what would you say then to people that are in that 62%, was it? 63. 63 % of people. And that statistic changes year to year, but that's roughly the number.

30:27David Friedberg:63 % of Americans, you know, less than$500 of savings and working paycheck to paycheck and can't pay for a fiscal emergency. So for those people, the 63 % who you're telling them that buying a house is now like unaffordable, it's and also it's potentially not a good investment. If they're trying to sort of cross that chasm and get over to the side where they have assets, what would your prescription be for them? What should they do? man that's a great question people will challenge it but i would have never thought that podcasting would be such a massive business i would have never thought that being an instagram influencer would be such a massive business or a tiktok influencer i would have never thought that individual artists could publish online and make money without getting a record deal i would have never thought that individual artists would be able to sell their work and make a living on ebay and Etsy.

31:20David Friedberg:I would have never thought that craftspeople would be able to find jobs through the internet. I think the internet has been this incredible enabler of millions of new ways to work, of new ways to earn an income. And a lot of people will roll their eyes and say, but that's not what the system was supposed to have set me up for. The system failed us. Maybe the system did fail you. And maybe the government solution wasn't the right solution, but human agency is what got all these people there. They all got to this place. Did the government give you your job as a podcaster? Did the government teach you how to podcast and build this incredible media empire that you've built?

31:52David Friedberg:I don't know if the government played much of a role in it. I think you played the role in it. I don't know. You tell me if I'm wrong. But I think that this is really important for a lot of people to observe firstly, which is the government isn't going to save individuals. The government's going to make things harder for individuals to find their path. If I have to go and start a barbershop, I got to go get all these cosmetology licenses. I got to go figure out a way to go to school, pay thousands of dollars, get health inspections done. There's a lot of government layers that stop me from doing that work.

32:21David Friedberg:There's a lot of ways that the government actually inhibits people's agency and makes it harder for them to do the things that they want to do and progress. I think that's just fundamental for me, one of the observable truths. But I think the second thing is I never discount human agency. There was this great podcast done years ago by those guys at the Hoover Institute where they talked about the success of China. And a lot of people, you know, where China grew GDP per capita from like$3 ,000 to$30 ,000 or whatever it was. And they're like, man, Chinese central planning is brilliant. They're so good at this.

32:53David Friedberg:And these guys made the argument, which I discounted at the time, but I often think about nowadays, that it was actually the agency of the individual choice. the entrepreneurship, the drive, the motivation of the population of the individuals in China, not central planning. But basically, the government enabled free markets. They allowed people to work. They allowed people to trade. They allowed people to create value for each other, to do something that someone else might want. They looked around and they said, I think you want this, and they started making it. And when the government loosened the shackles on individuals, that population grew the economy.

33:28David Friedberg:And the government still has a big role in central planning in China. But it was a really important point. If you think about all the success that's come from the United States, it's not a central message that the government said, let's do this, and then we're going to do this, and we're going to do this. It's individuals making their own choices. You've seen what people want to learn, what people want to watch, what they're interested in, and you give it to them, you create value for them, you deliver that value, and you've earned something from that. People are willing to pay for that. And I think that that's core to kind of where we can go from here.

33:56David Friedberg:And I don't think we teach it in schools. I don't think we teach it as a value. We've lost that value of agency, the importance of the individual taking their own action. Every conversation we have in every frigging context is all about the frigging government. Government this, do this, do this, do this, do this for me. What individuals can do is limitless. And that's where I think we fall short. Every day someone should ask themselves, I tell my kids this, but what did you do today that someone else valued? And if you focus on figuring out something that you can do that someone else can value and you do that over and over again rinse and repeat i think there's paths for people so a couple of counter arguments here yeah so we can stress test this thinking um you pointed at me and said i was you know i started podcasts i started businesses those businesses grew um and it was you know you were very generous in giving me probably more credit than i deserved there but if i was to if i was to rebuttal that i would say i was born in africa would that have been possible in africa would that have been possible in like Nigeria where my mother's from or would it have been possible in Botswana where I was born is it the fact that I moved to the UK where I had this sort of foundation of stability because of the government where school was free for us healthcare is taken care of so I never had to think about those things which allowed me at 18 years old to like not go to university take a risk drop out be in that room no when I was sat in that room in Manchester I actually at one point printed off the job seekers allowance forms which are basically the government will give me free money if i if i get to the point where my shoplifting of pizzas um is no longer a reliable way to feed myself yeah but i had that form on my desk and it was there and there's maybe something psychological about knowing that i had this sort of like underlying safety net where i could rush back a 300 mile round trip to my parents in plymouth and i could like live in the house or i could fill out this form this job seekers allowance form and they would like pay me money that allowed me maybe at some deeper level to go and take that risk.

35:54And I never even realized the privilege of like, oh, there's like healthcare and there's laws and there's roads and there's like this wifi thing that allows me with this laptop in my room to like build this website that I built. So that's the government's involvement in my success. They gave me this great foundation of stability and infrastructure. Great, great role for government to play. But the problem is that's a slippery slope, right? That's right. And so there's balance here. There's nuance of like personal agency, but then also the government do you need to give me a good foundation? That's right.

36:20And it starts to -

36:21David Friedberg:But the government shouldn't employ you. And that's the slippery slope that we end up on. And that's where I worry about our ability to come back from that. Because if you do end up with 40, 50 % of Americans getting paid some check from the government, it becomes very hard to get off of that check. And then people vote for that check to get bigger and bigger. The other point I wanted to point out of maybe a counterpoint is just like, and you know this because I've heard you say this before, but like there is a privilege that we both have in terms of our just nature. Yeah. Nature, nurture, whatever it might be.

36:51And I said nature because upbringing implies that our parents were great to us and that's what made us whatever. But also the opposite can be true. If you think about someone like Elon Musk, you go, his dad wasn't that nice to him. So not necessarily a lovely upbringing, but the circumstances -

37:05David Friedberg:Well, he was never without a meal and neither was I. And I mean, you know, those are important facts of privilege. The circumstances of our upbringing and maybe our nature, maybe our biology, maybe, set us up to be the certain type of person where agency, however that's defined. And again, I pause there. I think you're exactly right. And I think that that's what education should be teaching, that value. That's where I think this role of like, what's the role of a public school? What's the role of this infrastructure that government's building around us? If it's teaching you that your next job is to come and work for the city, or come and work for the state, it's not teaching you that you have agency.

37:43David Friedberg:it's not telling you if you if it's telling you that the only path you're going to have coming out of this rural school is to go work in the military it's not teaching you about your agency and i'm not saying it's wrong to do civil service or to do military service i think those are very important parts of what all of us should strive to do is to support the government that makes our society possible but i think that this idea that we should all be proposed as like the government role the government path the government work is what we should all be stuck doing for the rest of our lives is the wrong setup.

38:11The opposite is though also probably the wrong setup, which is that we should all start a business or become a creator.

38:16David Friedberg:I think that's a mistake too. But I think that this idea that you can find a path where you can provide value to someone as part of an organization, as an individual, as a leader, you can choose your path. But the idea that you should be accessing your capacity, that you can create value for someone else should be the objective. Do you think there's always going to be inequality? Yes. I mean, it's either inequality or it's lack of progress. I think those are the... That's the dance. That's the dance. So China's very good at this. If you watch their policy, they just recently shifted to a free market policy.

38:49David Friedberg:They literally just have like a throttle. I always vision Xi has this lever in his big room where he goes like free market, not free market. Like he's just kind of like rolling it back and forth. When you have a free market, people push the frontier. They discover new things. They make new things that have never been done before. or they create new value and the economy grows. The problem is it doesn't grow evenly initially. So like, let's say that you came up with a goose that lays golden eggs and - AI. AI. And you've got this technology. And this technology is making golden eggs and you're getting very wealthy with these golden eggs.

39:25David Friedberg:And then that goose makes two geese and three geese and four, it starts breeding and he starts selling the goose. And it takes a number of years before everyone has a golden goose. During that time, you've raced ahead because you've got now dozens of geese making lots of golden eggs for you. And a lot of people are like, I want a golden goose. By the time they get a golden goose, you've now got a million golden geese. And it feels like inequality. But the truth is now everyone here has a golden goose. And if you told them 30 years ago you would have a golden goose, they'd be like, no way, that'd be amazing.

39:53David Friedberg:So every day they're making the golden goose, they're printing the money, they're buying stuff with it. That's the problem with progress, whether it's medicine. A lot of medicines today are a million dollars a dose for like CAR T therapies, for example. These can save you from cancer. There are only 50 ,000 people in the US can get them every year. And there's hundreds of thousands of people that die because they don't have access to these therapies. So it's limited in terms of its availability. There's technology like AI. Not everyone has access to it. Not everyone owns a piece of a model, etc.

40:20David Friedberg:Not everyone's using it. And the people that are using it are getting ahead faster than the people behind. In your golden goose analogy, by the time that the golden geese get down to the sort of lower end of the socioeconomic ladder... Or defuse. I would use the word defuse, yeah. Yeah. Those golden eggs or whatever buy less because something happens along the way. That's right. So along the way, the government says, let's give everyone that. Let's give everyone access to more stuff to make up for that difference. And then things get more expensive. Is this in part because when the nation becomes prosperous because the GDP is high, when you have four-year election cycles, politicians get in by offering you lots of free stuff.

40:58And that is the nature of the four-year election cycle.

41:00David Friedberg:I always said the kid that got elected president in middle school was the kid who said he's going to make the vending machines free. That's always going to be true in any election. And at the end of the day, that's how the system grows. We don't talk about this for your election thing enough as maybe as being a bit of a causal factor. That's causing short-termism amongst these leaders where they're all just spending more money to... I cannot tell you how much it drives me nuts when I go to Washington, D.C. And I go to Washington, D.C. every couple of weeks or whatever. And I meet with congresspeople.

41:30David Friedberg:senators and representatives, literally all of them just talk about getting stuff for their constituents. That's all that they're there to do. Just get stuff for their people. That's their job. And that's how they get elected. And the incentive is, I'm going to get you something, vote for me. Now, the founding fathers kind of had this idea that they would rotate into public service and rotate out and go back to private life. There's a lot of writings about this, you know, in the early days of the formation of this republic. And it was like, we should all go do our tour of duty. We should go in.

42:02David Friedberg:There was never this belief that America would evolve to a world where you have career politicians, people that are just constantly trying to get elected. And their job is to be a politician. It's just such a mind numbingly crazy idea to think about. And all my politician friends are about to chop my head off about this. But I think it's nuts. I don't think a person should be a politician. I don't think that job title should exist. And I'm sorry to all the politicians out there. I think the people that represent the people should have the best long-term interests of the people in mind because they should be constrained to serving for a limited period of time, and then they go back to private life.

42:36David Friedberg:That means that we should have term limits. So you should never be able to be elected more than two terms as a senator or four terms as a representative or whatever it is. And it should be the case that if you're in one public office, maybe you shouldn't go transition to other public offices under those same limits. Because at the end of the day, you have created a system whereby you've proven that you can get stuff for people and your job is to go get stuff for people. And that causes the government to inflate, be mismanaged, you know, and then there's all the waste, fraud and abuse stuff that happens along the way.

43:07Everything is a trade-off, right? Even in that example, if some people did eight years in government and they know they're going back to private life, they could be dealing their friends. I'm going to do eight years in government. I'm going to run the transportation division. and I'm going to serve some nice benefits to my friend who runs Boeing. And then when I step back in, I'm going to step in as the chair.

43:27David Friedberg:That's a law to make sure that doesn't happen. And he goes to jail if that happens. That's a pretty easy fix. You can't buy stocks. You can't own stuff. You can't trade. I mean, there's just so many obvious things. If you're going to go serve in government, you can't do stuff that you can do as a private citizen. And you shouldn't be able to enrich yourself as a private citizen. And if you do, you should go to jail. But we should also make sure that the incentive structure is set up right so that good people come and work in government and that we have good rotation between public and private life.

43:52It's a hard problem, though, this problem of how you fix this incentive structure so that you don't just get, I mean, this stuff inevitably happens because we hand out lots of free things and we don't think about the long-term consequences. Has anyone fixed it globally? Is there any nation you look at as a model for a better?

44:07David Friedberg:A lot of people will point to Denmark. They'll point to places like that and say, hey, these guys do a great job. And there's a lot of public services and people pay high taxes. But, you know, there's not a lot of great progress. There's no entrepreneurial success coming out of those places. What happens in America, the freedoms that were afforded, the individual agency and liberty and rights to private property, creates an incentive structure that says, go try and do crazy stuff that could work. And if it works, there's tremendous return. So it's worth taking the risk. And that level of risk is what pushes the boundaries.

44:40David Friedberg:It's what discovered CAR-T therapy, what discovered gene editing that can lead to curing human diseases. It's what's discovered new advances in agriculture, new physics, new engineering, AI. All of these things came from this risk-taking system that we've set up in the United States that's built around these individual incentives. And it works. So you can have great comfort for a great many people in Denmark. And people will be very happy living there. And they will have a good life. but you will not have progress like you have in the United States. And we push the frontier because we create this incentive structure and that's where progress comes from.

45:16Would you say the vast majority would choose to live in a place like Denmark if it, you know, I'm looking at some of the stats here, they have higher societal trust in government, police institutions and strangers. They have standard 37-hour work weeks, five to six weeks of paid vacation and cultural emphasis on balance. They have lower ceiling of extreme wealth but a higher floor, so less poverty and financial ruin. And according to global happiness metrics, Denmark consistently ranks significantly higher than the United States. Most people would choose that, right? Absolutely. So central planning, it might stop a few, you know, very high agency ambitious people, but the vast majority would theoretically be happier with a Denmark model.

45:56David Friedberg:The vast majority maybe. And do you think the vast majority in this country actually would, if there was two buttons and they had to press, they'd press Denmark? One of the things that I think makes American culture different from Denmark is this idea of individual progress. So I think if you ask the majority of people, you can have that, but you don't get to progress, meaning you don't get to earn more next year and you don't get to earn more next year. You don't have a shot at becoming a millionaire. You don't have a shot at building something great. You don't have a shot at buying a second home.

46:26David Friedberg:You're limited, but you get that. Over here, you don't get anything guaranteed to you. You get some stuff guaranteed to you, but you don't get much more guaranteed to you. But you could have the world. You could make a million dollars. You could own a second home. You could buy a second car. You could pay off your kid's college tuition debt if you earn well. There's more options here. There's more guaranteed here. You think the 63 % would pick? I think even within the 63%, there would be some percent that would say this. But I do think this is why we're headed the way we're headed in the United States.

47:00David Friedberg:People want more of a guarantee. The question is, do you want to maximize the number of people that are happy? or do you want to maximize the number of people that are truly free? And by being truly free, increases the rate of progress across the whole population. And that rate of progress may be asymmetric. It may be diffuse. Starts with some, makes its way to others over time. I think that that's what America's chosen to be for the last 250 years. I'm not sure we're choosing to be that for the next 250 based on what's going on across the country right now. Maybe because people aren't happy. And actually, maybe that was always the more important thing versus progress.

47:35David Friedberg:important in an aggregate way again i'll come back to the individual we choose to live in a society because it gives us that foundation that you described that ability to have the safety the security to take risk to make our own decisions and potentially build a media empire as you have done and maybe you would have been happy in the other context where you didn't have that but would you have reached your potential as a human i'll be honest i'm not sure i would have been happy because again that goes back to my own nature it's just the way that i am if you put me in a room i'll try and create something and build something but i i've come to learn with time that not everybody has that bias or those desires not everybody has that lower t trauma from their childhood of being the only black kid in an all-white area and thinking money was really important and it was freedom and it was selfish like not everybody has has that so i i realized that when i designed solutions they shouldn't probably be designed for me yeah you know it's taken me a long time to get to that place because i kind of i was very much the challenge with America in this moment is can you give what you're describing the Denmark answer to enough Americans without taking away the liberty that the Americans that want to have that liberty have today and I'm not sure the answer is yes as soon as you start taking private property from these people the ones that are successful in this bucket then you're sort of taking away the incentive for them to be in this bucket in America and I'm seeing that yeah I see people want to leave.

48:56David Friedberg:And so you're not going to solve for everyone. But if you solve for this Denmark solution, I think you lose a lot of this. Well, the UK is quite an interesting example here for this very reason. I mean, one of the big subjects of conversation in the UK is that the millionaires are all leaving, or at least in high volume, and they're coming to other places. If you look at the millionaire exist maps that they publish often, they're going to Dubai or they're coming to America. A lot of my friends that are building technical companies in particular have come over to america yeah for this reason yeah and i do think we might have a little bit of a we have a bit of a spending problem it seems but also i think we might have a bit of a productivity problem in the uk in the uk yeah well do you think the productivity problem is related to the spending problem oh yes of course right if you're collecting checks or getting services provided to you the incentive to be more productive as an individual goes away but also as a system it becomes a lot harder to create economic incentives for productivity gains when tax rates are very high and you don't actually get to reap the benefits of the risk you take and and so on that's the economic argument listen i've been catfished by furniture my whole life where something has looked fantastic in the picture whether it's a sofa whatever it might be and i order it and i get so excited and then it comes and it's something entirely different the quality was significantly different to what it said or looks like online or the the texture was different or it didn't hold up in the same way.

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51:52It's amazing. I mean, this kind of does tie into the subject of artificial intelligence and where it all fits. In part, because the narrative of artificial intelligence is that it's about to take our jobs. And you think about that, that's why I wanted to start with the backdrop. Think about that backdrop of, I'm already struggling. I'm in the 63%. And now you're telling me I'm going to lose this fucking job that's paying me? And I'm already living hand to mouth. And what's the offer? We might get UBI. We might be sent checks in the post at some point. Well, actually, I like my job. It's a community, a sense of purpose.

52:22It gives me something to do. And that's the narrative. Yes, that is the narrative. You don't believe the narrative. I believe what everyone's feeling. But this narrative that AI will take jobs away. You don't believe it.

52:36David Friedberg:I recently pulled up and you guys can go to archive.org. There's a Newsweek article about computers will take all the jobs from 1963. So the mainframes are what got put in the basement in the 60s. And everyone like had to walk past the scary mainframe on the right. It's like blinking lights and buzzing and making sounds. And it's like the mainframe is going to destroy all the accountant jobs, all the typing jobs, all these things that we all do that we get paid to do. And I like working in my office. I like my colleagues. I like coming in every day, having lunch. that's a good life this mainframe is going to ruin my life and so there was this effort to legislate against these things at the time that didn't get through in congress and then in the 80s there was another wave on computing where it was like hey now we're all getting desktop computers it's going to replace the workers and it's going to be a desktop computer and a worker and like 50 people disappear out of the workforce so empirically meaning from data from evidence over all periods of technological revolution like this we've never seen jobs decline we've always seen jobs go up and we've seen demand go up and therefore incomes rise when new technology enters the workforce.

53:39David Friedberg:That's because the new technology makes an individual more productive so they can do more per hour with their time. And as a result, they can get paid more for doing that work. So imagine instead of having a painter painting a wall, what if he was in charge of the five robots that are painting the wall? Okay, great. Now he's going to get paid more because you can, you know, get so many more homes painted in a day. He's going to get paid more to do that work. People are going to be like, well, there's only so many homes. That's always the argument is you always think about the fixed pie argument that the pie doesn't grow.

54:07David Friedberg:But what always happens is that the pie grows. The economy grows is the way to think about it. And so as automation or technology is used to give individuals more leverage to do more things with their time, then more things get done. People come up with these new product ideas with, hey, we've got excess capital. Let's build new homes. Let's build a building. But who benefits from the expansion of that pie? In all cases, there's been deep economic value created for the entire workforce, all the way down to the lowest level. It doesn't happen overnight. And that's where during that period of time when you see the new technology, oh, the mainframe's in the basement or the desktop computer's on my colleague's desk.

54:47David Friedberg:And you're like, oh, my God, I'm going to lose my job. To the time that your company is growing considerably their revenue and giving everyone raises and everyone bonuses and adding more product lines and doing more stuff. you're like, oh man, okay, I feel better. And I think that would be the argument from the 60s and 80s. And even back in the industrial revolution. But the question today is, how does work change? Because remember, in the industrial revolution, people moved from farms, 60 % of labor was in farming. Today, it's like 2 % into factories. And they got paid a lot more and they lived a better life.

55:20David Friedberg:They actually were able to afford healthcare, yada, yada, yada. And the transition in any sort of like technological revolution is net beneficial for all parties involved, but there is a transition. So what's it going to look like? Are we all going to lose our jobs? AI is definitely different, but I don't think that AI is this world where humans are going to look around and be like, none of us have anything to do anymore. Like, I don't believe in that narrative. And the reason is I already see extraordinary creative things being done with AI that were not possible years ago. people are creating tv shows one person that they would have needed a staff of 20 people to do and they can use ai to create ai generated content and put these shows out on on youtube or tiktok or instagram i mean look you may not like how it looks today there may be a lot of ai slop out there but as this stuff gets better and better the creative output of people using ai on creative channels where we're all consuming media is only going to go up and people are going to make money that they weren't able to make before from that output as other people consume it my ability to do work.

56:23David Friedberg:I don't have to, you know, think about my, you know, four hours a day that I'm writing documents today. I can get all that work done in 10 minutes or 15 minutes. And then I can spend the other three and a half hours doing other things that create new value for my company. If we go back to the top of this, the robot painter analogy. Yes. You said a guy might have had five people painting. Now they can have five robots painting. No, I was saying the guy, instead of painting on his own, he can now have five robots painting. Yeah. And then he can now produce five times as much with his time. Think about what we saw with the desktop computer revolution, right?

56:55David Friedberg:Adobe Photoshop came around and everyone was like, oh my God, like photographers are out of work because a big part of being a photographer was all the post editing and cleaning up and airbrushing and all this sort of stuff. And they're like, that whole industry is destroyed with Photoshop. What ended up happening is a ton more media was created and print media was created because Photoshop created leverage to create many more beautiful images. And then all these magazines took off. If you look at magazine circulation, they grew considerably as Photoshop came out because it allowed much more production on high-value photography.

57:23I think the reason why it feels different is because that's, I mean, the Industrial Revolution example is kind of like physical work moving to cognitive work. That was cognitive work creating a new type of cognitive work, the Adobe analogy. If AI takes the cognitive work, and from what you said about robotics, robotics takes a lot of the physical work, what is this third type of work? I think it's cognitive and physical.

57:44David Friedberg:It's no different than what we've seen in the past, but it doesn't mean that there isn't an individual who's going to program the robot on what rooms to paint, how to paint them, how to do the detailing correct. The homeowner doesn't have the level of skill that the painter does. Right. So the painter. And I couldn't do that. Maybe at some point. I mean, you could make this argument on a continuum where eventually everything, nothing exists. But along the way, there are new things that are emerging. Think about going back 50 years. There was no yoga instructor. There was no dog walker. There was no Instagram influencer.

58:15David Friedberg:There was no podcaster. I mean, there's a million versions of new work that emerged along the way as the Internet took hold and people could start to spend their time or market themselves or market their capabilities in other ways. So I think it's a pessimistic view to assume that robots replace all humans and then humans have no logic, no agency, no capacity for creative work anymore. I have an optimistic view on this, which is that AI and robotics enables individuals to do far more things than they ever could have contemplated. And that's going to give everyone much more ability to realize their potential with their agency.

58:48I mean, even the podcast, I think game is going to be significantly disrupted in some part. We ran a test a couple of years ago to figure out if a synthesized voice of me could have the same average view duration as me. And it was just me reading out the stories of founders through history. So I did like a Steve Jobs episode where it was my voice, AI had written the script, AI had synthesized my voice. So I had no involvement. And the amount of people that got to the end was 40 to 50 % of an hour. And they knew it was AI because it said at the top, this is an AI podcast. And so I thought, okay, there is a lot of informational part of what me and you do.

59:21where we're sharing just in pure play information that will be taken away. However, what I hear through listening to your answer about creators and art, you're saying that there will be this human, sort of irreplaceably human component, yoga teachers. Yoga teachers aren't telling you yoga. It's also community and gathering in real life and being there amongst other people.

59:39David Friedberg:I think the IRL job world is going to explode and I think it's going to be extremely valuable. I always had this view like, oh, coffee shops will be automated, but I actually think the opposite is probably true. I think there will be a premium on coffee shops. I'll pay$40 for a latte because that human is making the latte and I get to go be with other humans. I get to go to a workout class with humans. I get to go spend time at a concert. I get to go spend time at dinners. I think this like event, live space, experiential part of our world that we kind of think about as luxury today, maybe it becomes more core.

1:00:12David Friedberg:Like maybe it becomes more of how we spend our time. Maybe we spend 30, 40 % of our time, you know, in these sorts of spaces. And automation is generating income for us and supporting us in, you know, whatever pursuit we're interested in, in work. And we spend far less time doing work and far more time paying a premium in the economy, in the live space economy. It's hard, isn't it? Because we don't know what these jobs are. We just don't. And that's, I mean, imagine telling someone that worked in a factory in 1923, that fast forward 100 years, there's going to be people making X dollars as personal trainers.

1:00:48David Friedberg:Or there's someone that has a job dog walking in their neighborhood. I don't know if that would have been like grok fully. But the pace of disruption here seems to be different than like the industrial revolution. It's targeting cognitive work. It's built on this platform called the internet, which has this... I'm telling you, I just don't see it. At my work, everyone's using AI and everyone's just doing more. And then they ask for more employees. You can kind of think about a business having two sides, revenue and costs. revenues. I'm making stuff and people are paying me for the things I'm making or doing.

1:01:18David Friedberg:Cost is how am I operating the business? Like what am I spending? And the argument has always been like, okay, you're going to lose customer service reps. You're going to lose all the cost side of the equation. No one ever says you're going to lose the revenue side. The truth is on the revenue side, what ends up happening is you create new products that you couldn't create before because of AI. The technology enables so much advancement in your business. Let's say you're a material science company. This is totally esoteric, but like, let's say your job as a company is to discover new materials, new synthetics that can be used to make microchips or be used for computing or be used for travel or for airplanes.

1:01:54David Friedberg:The material science world has been challenged by its experimental cycle. You got to create an experiment, make a product, test it, do it all manually. It's all creative ideas. It's all human potential. AI can now screen through millions of material science ideas in a computer, print them out, test them, and you can automate that throughput. Therefore, that materials company can now have more revenue. They can make more products. Do you not think that maybe there's a possibility that people like me and you exist in this particular band where because we're both founders and we have capital, and we're thinking about how to really push intelligence to create new things, that maybe we, because what you're saying, I can relate to, I can relate to the fact that AI has made me actually quite, it's probably made me more ambitious about hiring, especially in the near term.

1:02:38I would caveat it by saying that there's a certain type of role that I'm now hiring much less. And especially when you think about entry-level roles, I have to pause a lot more now because a lot of the agents and some tooling can do some of those things that I would have otherwise hired for. But generally, I feel like I'm hiring as fast as I possibly can. But would you not say that for like the 21-year-old that's graduated from university or the DoorDash driver or those types of individuals, where the leap from where they currently are on a factory floor, assembling a part or flipping packages, the leap from where they are to this new world is so great that there's going to be this messy middle.

1:03:22David Friedberg:Yeah, what I'm saying is as new products are created, new revenue comes in, you don't cut costs, you grow costs. And you hire more people and you up level and you train people. That is what I'm seeing on the ground. You know, we just published, I think, one of the lowest unemployment rates in the U.S. And I think that this idea that your current job is going to get disrupted and you're going to lose your job, I don't think it's how the enterprise transitions. The enterprise transitions, meaning companies, by doing more things and bringing people up the ladder, hiring more people. And that's just what I'm seeing on the ground.

1:03:55David Friedberg:I think that there's a media narrative on like, oh my God, there was a layoff at so-and-so company because it underlines what they've been promoting to everyone, which is AI is going to cause job loss. The interesting thing is it didn't come from the media. It came from the AI guys. Yeah. Yeah. This is the biggest... This drives me nuts. I listen to All In podcast. By the way, it's one of my favorite podcasts. I don't think I've ever missed an episode. So I very much understand your perspective and all of your colleagues. I had no idea you were a fan. No, no, I do. I've listened to... I've gone on people's shows or they're like, I don't know who you are.

1:04:22David Friedberg:And I'm like, it's good to meet you. No, no, no. I don't think I've ever missed an episode since the beginning. So I understand your perspective. You've heard all this. I've heard all of this and I've heard Jason's opinion. Weirdly, I tend to side a little bit more with Jason on this because I think Jason, I don't know why his arguments seem to present the most nuance. And also, I would say, when we think about different people's incentives, yeah, you're right. Often on that show, it's framed as a media narrative, whereas it's actually all your friends. Yeah, no. So first of all, none of them are my friends.

1:04:52David Friedberg:Elon's your friend. Okay. So what I will say, like I've said this on the show, I'll say it again. I think there is a deep arrogance in making these sorts of proclamations. Which proclamations? That we're not going to work anymore. It effectively discounts the human. It's like what you do today is your limit. But I think that this idea that like these jobs will go away is sourced by people that are seeing the crazy stuff that they're doing. and they're like, oh my God, this is amazing. I'm responsible for this. We are going to change the world. We are going to take all jobs and they're all going to sit in my computer.

1:05:28David Friedberg:I don't think that that's what happens because I think that humans have a profound capacity for doing things that, you know, these technologists don't necessarily see. The great technologists see technology, they don't see people. I think you have to see people, meaning the potential of people, of individuals. and you have to believe in that. They believe in technology, they engineer technology. But I am not going to like be pessimistic about people. I think that people have capacity in any environment. I mean, the amazing thing about humans is our adaptability. We can live in any climate. We can eat any kind of food.

1:06:05David Friedberg:I mean, that's all this, like we can work all these different jobs. I mean, we're amazing. Humans are amazing. And arguably many humans have been limited in their potential. And I think that AI enables more capacity for those individuals to realize more of their potential. Much of the conversation we've had about the US economy has centered around incentive structures leading to inevitable outcomes. You know, the older I've gotten, the more I just try and look at incentives to figure out behavior and also to figure out who to trust. So when I look at the incentives of the people that are building the AI companies, Andy Jassy has said that there's going to be fewer people doing some of the jobs that are being done today.

1:06:42Then they cut, you know, tens of thousands of jobs. Mark Benioff, who I know has been on your show, cut 4 ,000 jobs and said, I need less heads because of AI. And I swear, okay, maybe they're saying that because they want their share price to go up because it's a good, you know, we're going to reduce costs as a good narrative. But then I look at the other, the AI CEOs, Dario, Elon, Sam Altman, and I go, their incentives, I'd say other than the exception of Elon, have just kind of changed with whatever's good for them at that moment. Oftentimes, I actually, I think Dario might be the exception a little bit because he seems to be a bit more nuanced.

1:07:15If I go back through the quotes of these individuals, you have Sam Altman in February 2015 saying development of super machine intelligence is probably the greatest threat to the continued existence of humanity. You have Elon in 2014 saying with artificial intelligence, we are summoning the demon. It's far more dangerous than nukes. Mitigating the risk of extinction from AI should be a global priority alongside societal scale risks such as pandemics and nuclear wars. And that was signed by Sam Altman, Demis, Dario, Bill Gates, amongst many hundreds of others. Sam Altman in the Senate in 2023. I think if this technology goes wrong, it can go very wrong.

1:07:55OpenAI, superintelligence letter they wrote. The disempowerment of humanity or even human extinction could be caused by superintelligence. Again, in The Athletic, Sam Altman. Jobs are definitely going to go away. Full stop. Dari Amadei, May 2025, he predicted a white-collar bloodbath, half of entry-level, white-collar jobs gone, unemployment at 10 % to 20 % within one to five years.

1:08:19David Friedberg:10 % to 20 % unemployment in one to five years. It's pretty high. And Altman at the Federal Reserve in July 2025 said, whole job categories will disappear, customer support first. That one is, quote, totally, totally gone. And then suddenly the message changed. Before his sort of pre-IPO discussions, he said things could go pretty wrong. and then he says that he now has changed his mind and he's delighted that he feels like he was wrong. And suddenly he's talking about how OpenAI and ChatGPT will benefit all of humanity. And that's their goal. Should we trust the same people that told us to be scared when they say don't be scared?

1:08:52First of all, I think there was a bunch of companies

1:08:56David Friedberg:that said early on that they were like cutting all their customer service reps. Which was the big company starts with a K? Klarna, but I did call the founder. And what'd you find out? He said that he's been misinterpreted in the press. I heard you guys talk about this in the All In podcast, but I've actually called him live on this show. And did he rehire or like, what did he do? He said that the media just completely misconstrued what he said. Initially or later? He said he had 7 ,000 employees. By the end of last summer, he said he'd been on 3 ,000. But the media framed it as, I had 7 ,000 employees and then I tried to cut some.

1:09:26I realized I couldn't and I went back. That's not what happened. And it's just, I see it on all these podcasts and I'm just repeating it. I heard it repeated on your show like.

1:09:32David Friedberg:But he said we are cutting because of AI. Yeah. And he's confirmed that he's doing that. He's DMed me on X. I've got the DM. And live on this show, he confirmed it to all of our listeners. Is his business still growing? The business is growing. What he did say, and this is a point of nuance, is with the cost savings, he's able to offer better white glove services to his highest ticket clients, which makes a lot of sense. Yes. And you could think about that analogy being in another business where they would take that capital, invest in offering new products, new services. But then you need employees to offer those new products and new services.

1:10:03David Friedberg:And so you do actually hire up. And I think that is what I am actually seeing on the ground. And while he may have this acute restructuring he's doing on the ground, I just see people hiring more because they can do more with AI. It's counterintuitive. But if you're a business manager, you can invest$10 and make one product a year, or you can invest$20 and make five products a year. You're going to invest the$20 to make five products a year. You're going to spend more. and I think that's what AI does as soon as you have the ability to get leverage on how much more productive people are you'll put more capital towards hiring more people and scale up that's just what I'm seeing and look I could be wrong and all jobs go away in five years and we have 20 % unemployment I don't think that that's the case I think that again like we can go back to this like where people are going to be spending their time I do think that there's going to be a big growth in media I think there's going to be a big growth in um and media encompassing everything, digital content creation, etc.

1:11:01David Friedberg:I think there's going to be a big growth in entrepreneurship, and I think there's going to be a big growth in IRL stuff. I'll play this in interviews, and Klan has always mentioned, because I think the media has said that you double down on AI, then you reversed because it didn't work out. So I know I spoke to you a while ago, and we exchanged a couple of DMs about it, but that was almost a year ago now. So I just wanted to get an update on Klan's business, AI agents, and all of that, if possible. This was five months ago. First and foremost, we were early on released AI to support our customer service, which had that initial benefit of more calls being dealt with by AI, which customers liked because those calls or chat messages were much, much faster and more qualitative.

1:11:44Then since then, that has actually expanded slightly. slightly. What we did, however, try to communicate as well is that we believed in a world of where AI is cheap and available, the value of human interaction will be regarded as higher. So the future of customer service VIP is a human. We have then, hence, doubled down on providing more of that. But at the same point of time, the efficiency gains within the company has continued. I mean, we used to be about 6 ,000 people and now we are less than 3 ,000, which is two, three years since we stopped recruiting. And at the same point of time, our revenue has doubled, right?

1:12:24No.

1:12:25David Friedberg:This is a startup, just to be clear. I don't know if we can, and again, I'm not going to like sit here and concede or argue jobs aren't going to change, but a startup that grew very quickly and then cut heads is a pretty common phenomenon. So I don't know how much restructuring he was doing in his AI-ification of his business. That's totally fine and totally fair. But the question is, what are the people that were doing customer service calls and sitting, you know, how many of them were actually fully occupied on the phone? I don't know. Like, were they on the phone for four hours a day, two hours a day, or eight hours a day?

1:12:59David Friedberg:Were they actually fully employed? Really? Were they truly fully employed? I don't know. And what are they doing now? And is whatever they're doing now, is that defensible, again, from this spread of intelligence? Yeah. Because they could be DoorDash. I don't know. They could be lawyers, but they could also be doing DoorDash. And Dara sat here and said that the 9 ,000 people that are riders won't have jobs. The ones that are driving food around. Yeah. And drivers. Yeah. That's obviously all their big investments. I was with him the other day and he was talking about their autonomous vehicle investments.

1:13:26David Friedberg:Yeah. And how, I mean, that's the big part. What does he think? He thinks that those drivers will have to go, will do something else. What does he think that something else is? He loosely hypothesized. It might be, it could be data labeling. Now, let me just go back because your whole point about like AI is going to destroy us all and these guys were making all these claims and then they all kind of backtracked. I think there's an important question to ask, which is like, should we stop AI development? And can we? Meaning, can we really affect what China does? Can we really affect what Europe does?

1:13:55David Friedberg:Can we really affect what some lab in Indonesia does if they get a group of people together? there are moments in human history when technology advances and it's not like you can just put the catapult away and be like let's like no one can develop the catapult anymore like once the catapult's out there the catapult's out there we're just there so the the question is like it's what is going to enable the most kind of productive path forward for you know u.s policy for u.s citizens and china's asking themselves the same question what's the most productive path forward China policy for China citizens.

1:14:28David Friedberg:China's answer, I think, is to make models free and ubiquitous, which, by the way, benefits a large part of the global economy. But it doesn't do very well with Sam Altman, Dario, Google, or others that have invested billions or hundreds of billions of dollars in model development. And now those investments that they've made have been reduced to rubble because China's got a model that's as good or cheaper. So I think the more important question is like, what does the US do to navigate? If we stop data centers, those data centers are going to be built somewhere else. They'll be built in Iceland.

1:14:59David Friedberg:They'll be built in China. They'll be built in Indonesia. They'll be built in places where you can get access to energy and plug them into the internet. Now they're on the internet. So do we want those data centers to exist in the US because they're going to create jobs and create economic value? Or do we want them to be built offshore? Do we want to have the AI models built in the US or do we want to have them built by China. Those are the, I think, the important policy decisions. The idea that you can slow or stop AI development and fortunately think at this moment, it's too far too late. Like the AI is out there.

1:15:31David Friedberg:The framing on is it bad or is it good, I think requires observation on what's going on on the ground. And I do think there's a ton of stories. I mean, look at the number of companies that are doing stuff that you could never do before because of AI. I mean, just to get into your point about delivery, I mean, there are delivery companies delivering robots on the ground, robotic cars, drones. Those companies aren't employee-less. There's now 15 ,000 new jobs being created at the factory that's making the robots, or 15 ,000 jobs to service the robots because they're breaking down all the time, or 15 ,000 jobs to get the food made that goes into the robots or maybe that gets automated but like as you kind of think about the impact the economy doesn't just shrink in terms of jobs we're just not seeing it in the data it's not happening and when it does happen i think that's a good time to have a conversation about ai taxes and all this sort of stuff okay so let's ask that question and what would have to happen what sort of metrical piece of evidence job loss job loss yeah and wage growth right so if wages are declining and um uh unemployment is climbing that's a red flag i mean that's an alert moment And that's when we have to address this from policy.

1:16:42David Friedberg:But it's very speculative right now. And if you get in the way and you stop it and you stop advancement or like the ability to create higher paying jobs, the ability to create new jobs, and you turn it, you turn all of that off, it's going to happen in China. It's going to happen in Europe. It's going to happen in South America. And the U.S. gets left behind. Maybe that's the decision that, you know, we decide to make. But I would argue that this kind of tracking of what's the consequence that we're worried about is the most important thing to be doing at the moment. You might have heard about the study that, I think it was Stanford that did it, and they showed that there was a 13 % relative decline in employment for workers aged 22 to 25 in roles most exposed to generative AI.

1:17:20Could it be that by the time we start seeing significant job loss, it's a little bit too late to be having the conversation because it could be quite a rapid decline? If you think about the nature of this technology and the adoption of it.

1:17:31David Friedberg:No, no, I think what you're describing is exactly the right time. When we see the first sign of - Yeah, so what are those changes that are happening? Now, the question is, if you dig into that, and I do understand this, like in software engineering, what's happening right now is young people are not getting hired. You can use AI to write a lot of code. But in order to be really good at using AI to write a lot of code, you got to have experience writing code. Yeah. And so there's a fight for senior experienced software engineers. And there's disinterest in junior software engineers, because you're not just putting a junior software engineer in a seat to have them write their first line of code, which is what you used to do.

1:18:08David Friedberg:With AI, you can turn one engineer into a hundred, but the junior guy is not going to do that. The senior person is. So you want to hire more senior people. And that's what's happening in software across the board right now. But more of the operational functions that used to be done by people are also just being done by software. So if I think about, you might have had a PA whose job was to respond to your emails and check your emails and organize them and put them in your Monday board. Now with agents, I have an agent that goes across all of my inboxes every single day, pulls everything into the central system.

1:18:37And I would have, I used to have someone doing that kind of work. Now it's a software job. Now it's Claude doing it.

1:18:41David Friedberg:So now the PA can use Claude to do it. I don't need the PA. I can just do it myself. Okay, what else could you use that PA for in your life that you couldn't even contemplate using that PA for in the past? At the moment, it's real world stuff. I probably would have continued to hire more in that team. But now I don't need to because I've got this agent that does my scheduling, can help me with my scheduling. What are you going to do with the money you have, the extra money you have that you're not spending? This is a good point. And then that money you're investing. You're not going to just put that money in the bank and leave it as cash.

1:19:08David Friedberg:You're going to invest it in something. I can invest it in assets. What's an asset? It's either a productive or nonproductive asset. If it's productive, it's employing someone. It's doing stuff. I could theoretically go buy the S &P 500. And when you buy the S &P 500, that money goes to individuals that are now going to be able to employ more people. That capital finds a way to get spent. It goes into the economy. And that's my point. This is why economies grow when technology shows up. The leverage you got gave you more capital. You could either build a new product and hire more people to do it here, or you could choose to go buy the S &P.

1:19:39David Friedberg:But when you buy the S &P, that money ends up in other people's coffers, and they're using that money to hire people and do new stuff. At some point, the whole point of the economy is that money flows. and that money is going to ultimately flow into individuals that are productive. Do you not think a lot of it's going to flow disproportionately into the billionaires, the most wealthy, that are building the robots? I'm a huge advocate for open source for this reason. Open source. What does that mean for Janet and Dave who might not know what that term means? So open source just means that the software is free for anyone to use.

1:20:09David Friedberg:If you go back to the early days of the internet, Netscape made server software and Netscape made a browser. So in order to produce a website, you needed to pay for Netscape software. And you installed it on a server, and you pay Netscape a fee for that software, and then you could create a website. And then if you want to browse the internet, you've got to pay for Netscape Navigator, and then you use that navigator to browse the internet. So charge, charge, gatekeeper, gatekeeper. And guess what came along? The Mozilla Foundation made an open-source browser called Firefox, and the Apache Foundation came along and made an open-source web server.

1:20:43David Friedberg:and now anyone could download Apache and make their own website and plug it into the internet and it would be available to everyone in the world for free and anyone could download Firefox go on their computer and browse the internet for free open source then enabled all the entrepreneurs that built websites that made money to proliferate they weren't gatekept in the idea of AI open weight models open source models are free so now you don't have to go pay Anthropic or Claude or Gemini or ChatGPT for AI. You can actually use this AI model for free. And no one's making money off of you using it. There's no one getting paid.

1:21:23David Friedberg:The only cost is the cost of finding a computer to run that model. So you could have your own computer, you could rent one, but that cost is coming down like crazy now too. So this is the benefit of, this is why technology without government intervention is so amazing. It always gets cheaper and then everyone benefits. There could be a risk. Is that one of the key arguments of the open source idea, which is if anybody can download these AIs onto their computer, they can jailbreak them. They can use them as... So there's two things that people are fighting about. Number one, government people are saying, hey, that's coming from China.

1:21:52David Friedberg:We don't know if there's backdoors. That's not how open-weight models work, by the way. So people that are technically deficient don't fully grok what the open-weight model really is. It's not like some backdoor program that you're running. It's literally just a list of numbers in a document. It's, you know, trillions of numbers. That's all it is. And then some people are arguing like, okay, so now that AI is everywhere, everyone has access to it. You can use it to design a cyber weapon. You can use it to design a bioweapon. You can use it to design a physical weapon. There's all these things that you can now do.

1:22:24David Friedberg:You know, the same is true with DNA printing and DNA sequencing. Everyone can buy a DNA sequencer and a DNA printer and they could theoretically make a virus. That exists today. We haven't stopped DNA sequencing. We haven't stopped DNA printing. We don't have like constraints around it. Similarly, we haven't stopped people from buying guns. We haven't stopped people, you know, in the US. I mean, we can roll our eyes at this one. That's my good one. Right. Yeah. But I mean, look, there's a very good argument to be made that you could say that any sort of technology that theoretically could be used to cause harm should be banned and or the government should control it and decide who gets access to it.

1:22:59David Friedberg:And the flip side is that if it's allowed to proliferate, there's far more benefit than risk. And the risk side needs to be mitigated. And that's where you build good defense systems and so on. So we've got all these technologies for monitoring for cyber defense, for biodefense, and all these sorts of things that are critical for, you know, especially in a post AI era, like what are the big attack factors? So I think that's probably the way to think about this. And that might help the sort of inevitable inequality, golden gooses, or collecting into insight. I will bet you anything that in the next 10 years, there will be a billionaire that will emerge that has absolutely zero net worth today, downloaded open-sourced AI, and built a company that made them a billionaire five years from now, seven years from now.

1:23:43David Friedberg:And they're going to be someone that's going to come from nowhere. And everyone's going to be like, wow, look at that. And there's going to be a lot of these sorts of stories. And that's what we saw with the internet. This is something that I've made for you. I realized that the Diary of a CEO audience are strivers, whether it's in business or health. We all have big goals that we want to accomplish. And one of the things I've learned is that when you aim at the big, big, big goal, it can feel incredibly psychologically uncomfortable because it's kind of like being stood at the foot of Mount Everest and looking upwards.

1:24:12The way to accomplish your goals is by breaking them down into tiny, small steps. And we call this in our team, the 1%. And actually this philosophy is highly responsible for much of our success here. So what we've done so that you at home can accomplish any big goal that you have is we've made these 1 % diaries and we released these last year and they all sold out. So I asked my team over and over again to bring the diaries back, but also to introduce some new colors and to make some minor tweaks to the diary. So now we have a better range for you. So if you have a big goal in mind and you need a framework and a process and some motivation, then I highly recommend you get one of these diaries before they all sell out once again.

1:24:54And you can get yours at thediary.com. And if you want the link, the link is in the description below. So when Elon says that working will be a choice, you think he's wrong?

1:25:04David Friedberg:He's selling robots, but I do think he's right in a sense. And what I mean by that is like, think about how many hours a week you work. Do you have a sense? Just, I work all the time when my fiance is not around. Yes. So she's not around at the moment. and I are similar in the sense. So like, like every moment I can, I work, but like, we're more entrepreneurial. I would say that like, um, you know, look at Denmark, for example, 37 hours a week. What was the average number of hours worked 50 years ago, 60 years ago, a hundred years ago in the U S when you did farm labor and you were managing your own farm and that was your whole business or you worked in a factory.

1:25:40David Friedberg:I mean, there was 12 hour shifts. There was a lot more work per week being done. Going from 100 hours a week to 80 to 60 to 40, I mean, that is part of the progress of humanity, is that we're no longer encumbered by this labor category being told what to do and how to do it and when to do it in order to get money to pay our bills. But we get to this world where we have more capital. That capital is also time. And I've now accumulated the ability to make a choice on what do I do with 40 hours of my week. You know, we all have a hypothesis about how AI is going to play out. And I've heard many different hypotheses here.

1:26:13Which is the part of your hypothesis, like the principle within it, that could quite easily be a miscalculation? And how could you be wrong? Mass unemployment. But where in your current hypothesis would you have been, do you think is the weakest part of your sort of first principles that could result in that?

1:26:31David Friedberg:The choice that people will make to go to higher paying jobs, to different jobs, that they see an opportunity and they make a choice to change because i think that that's the key to this whole thing like if you were a taxi driver in new york and you were paying rent on a medallion what's a medallion so medallion is all a right to drive a cab in new york okay so there was a limited number of them and so the medallions were restricted the new york city said we'll only allow so many cabs on the streets so the price of medallions went up and up and up so then new york cab drivers would trade the medallions and the price of medallions got up to 500 grand and city group was a big lender on medallions so they would loan you 500 grand to go buy a medallion.

1:27:08David Friedberg:Then Uber came along. And this was one of the big battles around Uber at the time. You could get paid more and there's more rides with Uber. Uber grew the number of people taking car transportation around New York considerably. And when Uber demand shot up, a lot of these guys said, I'm not going to be a cab driver anymore. I'm going to go be an Uber driver. I can make more money as an Uber driver. And the number of Uber drivers grew. And look, there's a lot of regulation that's happened in New York since then with respect to Uber and whatnot. But everyone made the choice. They moved. The market found its way.

1:27:39David Friedberg:Individuals said, oh my God, I can make more money doing that. I could pick my own hours. I don't have to rent the medallion. It's a very similar sidestep. Yes. Going from being a taxi driver to a taxi driver for a different firm using an app is quite... So I could sit here and pontificate all day with you on this and we'd both be wrong, I'm sure. I don't know what the leap is going to be for an individual. I think we have to start to pull these stories out of the economy what's going on. Palantir put out this promotional video, which I thought was quite good, where they interviewed like a hospital administrator.

1:28:10David Friedberg:And she's like, well, I've got the AI doing all my paperwork. So I get to spend more time with patients now. Sorry, it was a nurse, not an administrator. She was a nurse. So she's like, I normally spend like most of my time filling out paperwork on the computer. But Palantir, the software takes care of all that for me. So now I can spend more time doing rounds face to face with patients. It's a better job. and it's better for her. And so she, you know, I think it was a very poignant story about kind of what AI actually does on the ground. So, you know, look, I mean, I think there's a lot of these sorts of examples.

1:28:38David Friedberg:We could counter-argue back and forth about them all day long and probably both be wrong. But this is what I would kind of observe on the ground on what's actually happening. I think we agree on the fact that jobs are going to get more human in every sense of the word. That was your yoga teacher example. That was the nurse that can spend more time with her patients. And actually that'll become even more valuable. It'll become more scarce. I think my concerns still, or the gap that I have in my head is like how that transition looks, especially at speed, retraining. You know, you talked about the human agency point.

1:29:05And should we be preparing for such a transition? Because I do also believe that we'll get to a, providing there's no existential issues, I do think we'll net out in a better place. But the journey to that better place, I still, is just this big question mark.

1:29:17David Friedberg:I think that's right. And I'm not trying to defend it and say it's going to be a clean, smooth line. I'm just trying to say like, we are going to get to a better place. you know we could argue all day long about displacement or dysfunction along the way or maybe a lot of people are smiling as they jump to new jobs and try new stuff out and they're like oh my god my life's better i'm optimistic in that sense i think you're right we have to track it and if people are out of work and can't find work and they're challenged in paying their bills we have a freaking problem and what's the solution to that problem is it ubi well that's gonna be socialism so in that in that messy middle you think we'll adopt socialism if that messy middle does occur And what does that look like in reality?

1:29:52Is it just giving money and free food? And I saw the Mamgani grocery stores.

1:29:56David Friedberg:Well, that's not going to work, but that'll take time to not work. But in the meantime, it'll look great. But yeah, it'll be more checks, more government employees. It's like the government creates jobs to pay people. They're not productive jobs, meaning if you get paid$100, do you create$120 of value? No, you're getting paid$100, maybe you're creating$60 or$80 of value. But, you know, that's just, there's going to be more government payments, whether it takes the form of UBI, government jobs grow, or some other sort of financial support. I mean, that's the direction of travel at the moment. All directions point to a more socialistic America.

1:30:33How do you feel about that?

1:30:34David Friedberg:I'm actually, I don't want to lose my agency. I don't want to lose my capacity, my liberty, my freedom. And I feel sad for people that embrace it because I think that they don't realize that they're losing their freedom in that process too. I think they're losing their agency. But it's offering them a solution where there's no other solution being offered. That they feel there's no other solution being offered. That's right. But it's also logical to say, if we talk about incentives, that billionaires want to stay billionaires. And billionaires aren't actually that philanthropic as they claim to be.

1:31:04And actually what billionaires are protecting are their interests. They want to remain free.

1:31:08David Friedberg:I had a call with Ro Khanna about this. Can you give context on who he is? Ro Khanna is a congressman from California who's been, he used to be a moderate Democrat and he's kind of pivoted to becoming a hard left, true socialist. In Silicon Valley is his district, California 17. He was asking me, why are people so outraged at my support for a wealth tax? He means billionaires being outraged. No, it's not billionaires. It's anyone that has built something and created value. Yeah. And it's just entrepreneurs, people that have had success. And he's like, I don't get it. It's just 5 % or 2 % a year or 1 % a year.

1:31:43David Friedberg:Like, why do people care? and I'm like, Ro, it's the first time in American history that you're talking about taking something from someone after they've paid their taxes and it's now their private property and the government gets to decide how much of their private property they get to keep. It doesn't matter that it's 1 % or 5 % or they'll be fine and Bernie Sanders, like the billionaires, will be fine. It's fundamental to private property rights. It makes me feel like, and everyone can think about this. It's not just rich people. Anyone can think about what does it mean to list out everything you own and send it to the government every year, and they decide what you get to keep.

1:32:20David Friedberg:That's what it feels like to everyone. Also, financially, it doesn't solve a problem. And I'll just give you the statistics. Total net worth of people in the U.S. is$183 trillion. Billionaires' total net worth is$8 trillion. And even if you take it from billionaire down to 50 millionaire, so people that have$50 million or more, the total assets, the total net worth is$23 trillion. 160 trillion is everyone else the problem is that the bottom 50 percent of americans only have six trillion and the middle that kind of 50 up to the 50 millionaire you know they've got 160 trillion that's where the net worth is in the united states it's in that kind of population that people call boomers or Gen X or whatever, the bottom 50 % have nothing.

1:33:08David Friedberg:And so if you taxed 100 % of the billionaire's net worth, that's$8 trillion. That's one year of the government spending. One year. It doesn't stop fundamentally a wealth tax. It doesn't actually solve a fiscal problem. It creates a system where you're like, everyone feels better about taking money from the billionaires. Are the billionaires paying their fair share of taxes? This is the politician's trick. The politician's trick is they say, how much tax did you pay as a percent of your assets? versus how much tax did you pay as a percent of your income your income is when you sell stocks or when you make money for services you provide and every year if you're wealthy in the united states in california i pay a 53 tax i pay like 14 california plus 39 federal but you must try and avoid that no i just pay it but i mean in terms of when i say avoid that i mean you would rather take it like a capital gains tax which is lower california there's no difference oh there's no difference yeah in california capital gains or income is the same which by the way should be the case at the federal level if you want to solve this compounding problem.

1:34:06David Friedberg:So can we lower income tax in the United States and raise capital gains tax? Absolutely. Can we make income tax lower for people that are working for their money versus people that are earning gains on their capital assets? Absolutely. And we can solve the problem that way. But by taking their assets, even if you took 100 % of the billionaire's assets, that's one year of spending. It doesn't actually solve a fiscal problem. The tax rate is the fiscal problem. So for these people, the 63 % that are, you know, potentially championing socialism because they need a solution. And it sounds like a solution.

1:34:37Make my bills cheaper. What they don't hear from, you know, other politicians is a better solution. And this one sounds great.

1:34:45David Friedberg:This is what's crazy to me. I don't get why all the politicians are fighting against a wealth tax or for a wealth tax, when there's like literally 15 other things you could do to make this better. Like, this is crazy. Make the capital gains and income tax the same, cut stupid spending at the federal level. And all of a sudden, things become more affordable. people have more take-home pay they can afford more stuff but let's be honest you're not going to be able to cut the the spending at the federal level which they've tried that and because of this for this whole thing we just talked about the four-year election cycles elon went in he tried to cut it he bounced straight back out yeah and i think that that to me was the most depressing piece because i was like oh my god elon's gonna go in he's gonna blow up spending we're finally gonna cut all the nonsense out of the spending and if elon can't no human can yeah and then i went and visited dc and i went to all these congress meetings and sat with senators and i was like oh my god none of them want to cut it like they're all on board with it this isn't even a party thing this is just like everyone's doing it and i'm like this is the system this is how it's set up holy shit we've had brian um slightly change direction but linked to ai um i know you you work in the life sciences so i wanted to ask you do you think we're going to be able to live forever soon or at least extend life significantly within the next couple of decades i do and i think the reason is we've discovered the mechanism of aging, which is the most fundamental of human diseases.

1:36:00David Friedberg:We have 10 trillion cells in our body. Every one of those cells has a copy of our DNA in the nucleus of the cell. That DNA, segments of it are called a gene. A, C, T, and G make up the little nucleotides and you put a bunch of them together and that's a gene. What is a gene? Well, a copy of that comes over to a protein printer in the cell called the ribosome. And the A, C, T, and g is the programming for which of 20 amino acids three letters is one amino acid that ribosome takes a segment of the dna copied as rna and it prints out amino acids and a sequence of amino acids from that gene which is defined by that gene makes a protein so all a protein is is a is a chain of amino acids as soon as it's done printing those amino acids collapse into a three dimensional machine called a protein so proteins are three-dimensional machines and they do crazy shit like there is a protein in your mitochondria that spins 6 000 times a second as hydrogen protons go through it and that's what makes energy in your cells that's what makes atp it's literally like a propeller like a turbine in your mitochondria and yourself it's an incredible machine there's machines that carry oxygen from your lungs into your cells in your body to give them oxygen that they need to work.

1:37:16David Friedberg:I mean, there are proteins that do all sorts of crazy stuff. So all the genes are, are the programming for making proteins in your cell. Now, your DNA is not a strand like this. It's actually kind of a small clustered thing. And there are little molecules that sit on top of the DNA that turn a gene on or off. So if the molecule is sitting on top of a certain gene, that gene is off. Like a little switch? Like a switch. What's it called? Someone used the name before. Histones. Histones, okay. Or acetyl markers. I thought it was epigenetics, but maybe I'll... So this is all epigenetics. Okay. So for a given cell, there are genes that are on or off.

1:37:51David Friedberg:The genes that are on, those proteins are being made in that cell. And the genes that are off, those proteins are not being made in that cell. And that's what makes all of our cells in our body different. Every one of our cells has the same DNA. But our eye cell and our brain cell and our heart cell and our skin cell just have different genes that are on or off. Okay, so those markers that sit on the genes, those little switches, Every time you drink a glass of alcohol or you go in the sun and get hit by the sunlight or smoke a cigarette or eat some bad food that's burnt, all of these things can cut DNA.

1:38:24David Friedberg:And when DNA gets cut, your cell is really good at fixing it. Puts it right back together. Happening millions of times a second in your body. Literally all over your body. And your DNA is breaking and your cell is fixing it. But every time your cell fixes it, there's a chance that that switch moves a little bit. And if the switch moves to the wrong place, suddenly that cell starts making the wrong protein or stops making the right protein. So statistically, over time, when you're a baby, everything is tuned great, working right. All the right proteins are being made in every cell. You're young.

1:38:58David Friedberg:Your skin is not wrinkly. You can run. You can breathe. You can see perfectly. As you're a young person, suddenly you turn 30 and you're like, wait, my vision's kind of fading a little bit. I can't run as fast. I can't breathe as deep. Like, oh my God, I'm getting wrinkles around my eyes, 40, 50. What happens as we get older is those switches kind of move around to the wrong places. And as those switches move around, that cell stops making the right protein and starts making the wrong protein and it becomes dysfunctional. And if that happens in enough cells, then that tissue starts to misbehave.

1:39:31David Friedberg:You get wrinkles. Your heart can't beat quite right. Your retina doesn't pick up light as well and transmit the signal of the light and things get blurry. Your hearing starts to lose. You can't think as quickly. You can't respond as quickly. That's what aging is. Aging is the core human disease. And as epigenetics, which is where the switches are on a cell, start to get moved around to the wrong place, and that tissue starts to misbehave, we get all these diseases. That could be one of the core drivers of cancer. Why is aging so even across my body then? Because all these cells are suffering the same statistical effect of time.

1:40:06David Friedberg:As DNA breaks happen in every cell in your body. And as those DNA breaks happen, those switches are moving around the same rate in all parts of your body. And that's why parts of your body start to suffer kind of, it's like, oh my God, my hip hurts, my eye, my brain. Your young viewers may not appreciate this, but being 46, I'm starting to appreciate it. And it's becoming more of an issue. Now, in 2006, a guy named Shinya Yamanaka discovered four proteins that you could put into a cell or apply to a cell. and it would basically take all the switches in that cell and move them to the place that a stem cell has, which is basically an embryo in a human.

1:40:46David Friedberg:And now that cell operates like an embryonic cell. And you can take that embryo cell and you can put other proteins on to move the switches around even more to turn that stem cell into an eye cell, into a skin cell, into a heart cell, into a lung cell, into a brain cell. So we suddenly developed this technology in the mid-2000s to take any cell and turn it into a stem cell, re-differentiate it, it's called differentiation, from one cell type to another. But then years later, another guy said, well, what if instead of putting a lot of that protein on the cell, we just put a little bit? So they took the Yamanaka factors, which are just four proteins, and they put a microdose of them on a couple cells.

1:41:29David Friedberg:And the switches started to move around, but they didn't move back to being a stem cell. what happened is they moved back to being a young version of that cell type so the eye cell basically became a young eye cell the skin cell became a young skin cell the heart cell became a young heart cell by putting a small dose of these proteins so it turns out that these proteins kind of move the switches around and if you put just a small amount of them on you can move the switches just back to the right position that's now called epigenetic reprogramming that's this new area of science that seems to indicate they've now done it in mice where the mice can live to the equivalent of 100 plus years old.

1:42:05David Friedberg:They've put it on the tissue of monkeys and gotten rid of the wrinkles. We now have just David Sinclair, just one of his companies did the dosing in the retina to reverse blindness in people with a retinopathy. So this epigenetic reprogramming is an entirely new lane of medicine that says not just can we address all of the downstream effects of aging, but can we go to the core? Can we reset aging in all these cells in the body? and the answer so far is yes the risk is if you reset it too much it becomes an embryo and it turns into cancer so that's what everyone's been working against in the last couple years is how do you put the right dose of the right proteins in the right cells to get them to reverse their age and become young again and the path it's really just an engineering exercise at this point as opposed to a biological proof of concept the science is there the foundation is there we're just doing the engineering so i am extremely excited and optimistic about this work it seems very likely that in the next couple of years we're going to have more human therapy trials that are going to not just address the core of aging but they'll start to put in like you know like they did with the eye cell maybe reverse wrinkles maybe improve cardiomyocytes improve the heart tissue so i think there'll be a lot more of the sort of thing coming to market over the next few years and ai is going to play a role i assume in accelerating this because you can perform I mean, you can theoretically make new discoveries, but you can run the tests faster, right?

1:43:29David Friedberg:You know, just to help provide some context on what goes on in a cell, you can kind of think about a cell has about 10 billion proteins interacting with each other, building things, breaking things, creating new molecules, creating new proteins, interacting, interacting. So the proteins are these machines, 10 billion of them in a cell. So if you assume each protein is the size of a human, the cell would be the size of Manhattan. So now imagine a city the size of Manhattan with 500-story tall skyscrapers in the Manhattan skyline and 10 billion people living in these buildings, going back and forth, building stuff together, talking, making babies, and assume they just do this for 80 years.

1:44:11David Friedberg:All these humans interacting, 10 billion humans in Manhattan for 80 years, nonstop. They don't sleep and they just keep working. That entire set of interactions is one second in one cell. That's how complicated biology is. And we have 10 trillion cells in our body. And those cells are all shooting out proteins and messages to each other all the time. To answer the question, AI allows us to build models to better understand what the heck is going on and to make predictions about proteins we could put into the cells that can affect the outcome of changing the epigenome on that DNA without us having a deterministic understanding of what's going on.

1:44:48David Friedberg:So with AI, I can come up with a million different ideas for a new protein. I can test it in silicon, how do it interact with other stuff, meaning on computers. I could see what happens. I could see if it actually has the same sort of effect as the other protein. Would it be more efficacious? And then I reduce my candidate list down. And I take that candidate list and I put it in a lab and now the labs are being automated and I can test it on cells and see if it's actually reversing aging. I can test it in models. And then I take that candidate and now I've got a probability of success in 10 years that instead of being 1 % is now like 75%.

1:45:19David Friedberg:And so that's the way AI plays a role in life sciences discovery. And it's transforming not just epigenetic reprogramming, which is this whole big avenue of medicine now, but it's transforming every aspect of biology and our understanding of life sciences, where we can use AI to make these simulations and have a better understanding of what these complicated, incredibly immense interaction sets look like or drive at the end state versus me needing to kind of be a scientist, being like, oh, I got a good idea. Let's try that. Okay, five weeks later. Okay, another good idea. Let's try that. And that all gets reduced to silica.

1:45:49And are you using your own model? are you training your own AI? Are you using some of the publicly available frontier models?

1:45:53David Friedberg:In my world, we use both. So we take our own data and then we build our own predictive models from it. And then separately, we use off the shelf life sciences models. And then we also use some of the general models. So it's a great combination. And to your questions and talking about AI earlier, oh my God, the stuff we can do is unbelievable. And it's mind blowing. And we're hiring more people because of it. And so like, it's not like AI got me to get rid of jobs. It's like the frontier has gotten so much wider. That's why I'm so optimistic about AI not destroying jobs, because all I see is opportunity with new companies, new ideas, new pathways, new things, new breakthroughs in sciences, in materials, in engineering, things that we could have never, ever tackled.

1:46:32David Friedberg:We can now tackle with AI. It is a persuasive argument. Okay, so what are the great lies in America in your view? If you go to any college with any degree, you're going to have a great job waiting for you at the end. Okay, number one. If you buy a home, you've achieved the American dream, and all of your assets should be in that home. Social security will take care of you when you get old, and it's a fair system. Everyone should have ownership in stocks is the truth about that lie. Because all the money that went into social security went out to the government to pay bills, and it wasn't actually kept in the trust.

1:47:13David Friedberg:And so as a result, social security is going to go bankrupt. So Social Security was one of the great lies on, you know, you'll be safe and protected when you retire. Those are three great lies. Is there any more that come to mind? I don't know about public pensions. And it's the same as the Social Security lie. When you put money into a pension plan, and that's called a defined benefit plan. When you retire, you're going to get$1 ,000 a week or whatever it is. And every paycheck, some money is taken out. And the idea is that the accountants and the investors will do a good job investing that money for you.

1:47:44David Friedberg:and you'll get your benefit at the end. If they don't do a good job, then the pension plan is bankrupt and you don't get your retirement check. And if they do too good a job or you put too much money in, then the pension plan is overfunded and you should be getting more money out than you're actually getting. So what companies realized was that pension plans are unfair. They either go bankrupt or they're overfunded. So that's when everyone moved to 401ks. And that middle class that we talked about earlier, those people that have$160 trillion of assets, The reason they have$160 trillion of assets is because a lot of them had 401ks.

1:48:17David Friedberg:Meanwhile, the bottom 50 % of people that are just relying on social security, they were making less than 3.5 % a year on their money. So that's the great lie, is that these public retirement funds would take care of their people. Is there a fifth great lie that comes to mind? I actually don't have a great answer for you on healthcare. I think that there's a moral obligation on healthcare. So I do buy into this. In a civil society, I could make the libertarian argument, but I won't. Because I do think it's probably the right thing to say, in a civil society, no one should be without healthcare.

1:48:54David Friedberg:How do you make that work where the government's paying bills and the costs don't go through the roof? That's a long, probably six-hour conversation. And it's very technical, I think, on what you have to do to make healthcare accessible. And it's definitely got to be a multi-tiered system. I guess one of the things that I was curious to get your take on, because I've not really heard you talk about this a lot on the All In podcast, is your view on everything that's going on with this bloody war and the situation there. I'm not sure if this is within your area of expertise, but it appears that the US is now stuck.

1:49:23David Friedberg:It's a quandary. I read Ray Dalio's piece a few weeks ago, which I thought was exactly right. The Chinese make their influence known in the same way that you would kind of read about it in Sun Tzu's Art of War. If you have to go to war, you've already lost. and that's a big difference between how the u.s behaves and how china behaves if you look back on the track record of president's decisions as it relates to foreign policy in the united states over the last couple decades there have not been a lot of good actions that have ended up in a good place i think china has this capacity for influence without action which is a really interesting model to observe.

1:50:04And the US has this kind of, I don't want to say incentive, but when you go to a general

1:50:11David Friedberg:and say, hey, should we go attack these guys? The general spends the whole time training to attack the guys. So, you know, and then you have a National Security Council and you have advisors and all this sort of stuff. But there's a priming in the US that I think maybe plays out in a way that maybe we take action when we shouldn't always be taking action. China's positioned that only possible because there is a dominant force that is running around trying to police everything. So they can kind of chill and let the US go police all the problems and wars. Their military capacity is pretty impressive, but it's untested at scale, I guess, is one argument you can make against that point.

1:50:44David Friedberg:I mean, China's got a lot of economic gamesmanship that they do. You know, we'll give you cheap stuff if we can get these things from you. You know, we'll keep an eye on you if you need help. I mean, there's like a lot of stuff that doesn't require direct kinetic action that they can kind of get things done. In terms of the U.S.'s position in Iran right now, there is, it appears, a threat to oil in terms of like the price at the pump. And I think it's the U.S. oil reserve is down to a couple of weeks. I want to say that it's on the order of 24 million barrels in the SPR. So at the G7 summit in France, President Donald Trump addressed the precocious state of global oil inventories following supply disruption.

1:51:25He said, we run out of reserves at about four weeks. you know there are reserves all over the world and we would really run out and there'll be a time when you wouldn't be able to get it it would be bedlam and this was just as i think this was the explanation as to why he signed that mou with iran so i mean if this is true then something needs to happen but again it doesn't appear that iran have much of an incentive now you've decapitated the leader for to do really anything they can kind of wait the game theory is iran

1:51:58David Friedberg:knows that the U.S. can't do much more. Yeah, we're going to drop more bombs. Right. And well, I mean, Iran's now threatened Arab neighbors with retaliation against their energy infrastructure, which would be devastating to Saudi, Qatar, UAE. So at this point, it seems like a bit of a stalemate that the U.S. can't act for fear of the retaliation and the impact it would have on America's actual allies in the region. What do you think happens here? Trump, straight of Hormuz, Iran now have this sort of chokehold on the world, it seems. I mean, the biggest driver also is the election cycle we're in.

1:52:32David Friedberg:The midterms? The midterms. So going into November, this war is deeply unpopular on both sides. And so trying to get rid of the war is the incentive at the moment. It's a tough situation. You seem hesitant here. No, I just, I'm not a great guy to opine on this. I just, I don't know what to do. But just when you look at it from the outside, you see a president that says he's going to bomb. He's not going to bomb. He's calling it off. He's bombing. He's not bombing. He's calling it off. We've got a deal. There's no deal. And you're flopping around. And I think even that as a behavior to observe from the outside, you go, oh, okay.

1:53:07Well, let me ask you one question.

1:53:08David Friedberg:It kind of makes them unpredictable, right? And that unpredictability can, in some cases, be an advantage. I do think people have made this case that the president's unpredictability makes it hard for people to have a clear path on how to attack. Like my poker player buddies, their whole poker strategy, the guys who are the best in the world, who I'm friends with, their whole strategy is like create randomness in your gamesmanship so that it's very hard for someone to exploit your gameplay. And, you know, I just don't know if you know what you're going to get with President Trump. You can meet with him and hear him say one thing and then he'll do something different later.

1:53:41I understand the merit of that argument. In this situation, what I'm observing now is he's become predictable. Yeah. In terms of? in terms of not being able to do anything like not not not taking action not taking action right threat post biggest strike coming since world war ii call it off what would you do if you were him what would i do yeah uh there's only bad outcomes so it's which bad out honestly i think which bad outcome am i willing to accept the most and i guess for someone like trump i don't know him but i i guess he's probably thinking which one would save the most face that's probably the right kind

1:54:18David Friedberg:of you know objective function for him i think the worst thing is all outcomes in my view lead to the strait of homos being now basically a tool of iranian negotiation and it wasn't before new point of leverage yeah new point of leverage in that region which is a powerful point of leverage yeah yeah but it may create um alternatives there's conversation about creating other pipelines out to israel oh yeah and so on so maybe at the end of the day it creates incentive for other channels to be opened, TBD. I do think it's not just about the Iranian program, but it's like, where's all the enriched uranium?

1:54:53David Friedberg:That's probably, if you're kind of asking a military advisor, I would say that's probably what they're thinking about as the core. Because it takes a long time to enrich uranium to use for nuclear fuel like this. So getting the enriched uranium is probably a key objective. The next election, 2028, for the presidential office, do you think a Republican's going to win in the course of how things are going for 28 yeah no i think it's going to be aoc you think it's going to be aoc yeah really at this point why that's all the stuff we've talked about i just think that that's the the state of the nation i think that's where people are at they want help people feel desperate and they want a candidate that can promise to help make their life better i think they're less concerned about you know freedom of movement the kind of stuff we talked about i think they're much more concerned about paying their bills and getting health care and getting child care and you think she's gonna run i think she'll run i think she'll beat buddhij and uh kamala kamala newsom newsom i don't think newsom's gonna have like a great presence on a national stage i think he he he looks and acts the part but it's gonna be hard for him to sell the rest of america and i think kamala is just like it's just no one wants to take the risk.

1:56:07David Friedberg:AOC is just like Mamdani in the sense that she brings a very different voice, you know, and I think this DSA movement has real legs to it. Because I don't see a lot of young people speaking out against the DSA movement. I see a lot of old Democrats speaking out against the DSA movement. You see Kamala Harris being perceived as more of a risk than AOC? Yeah, because she's lost before. Oh, okay. Yeah. But look, what do I know? It's interesting to you. I've heard you, I think I've heard you guys on the All In podcast say before that you think in 2020 it will be a democrat or a socialist that wins so i mean there's a lot of runway between here and there and look i mean i want to talk about the the profound frontiers in front of us because i think that there really is this idea and you know there's a lot of my friends who have this idea of this golden age hypothesis that we're entering this golden age and people don't realize we're in it that ai unleashes this capacity for human advancement.

1:57:04David Friedberg:So the age reversal stuff. Right now, we have a billion people in the world that are starving. We have hundreds of millions of people dying from curable disease. I think these are the sorts of things that are going to get resolved more quickly than we realize. I think that the productivity gains that are going to arise from AI are not just going to kind of, you know, be a battle on does the painter have a robot or not. But I think it's going to be about all this new stuff that's starting to be realized. Material science is going to have a profound revolution right now. Traveling to the moon, which might seem like a billionaire's fantasy, but ends up becoming kind of a real, true industrial frontier that everyone's going to participate in.

1:57:44David Friedberg:There's just extraordinary abundance that arises from the stuff, not in the sense that, oh, we're just making everything that we've had in the past cheaper, but the stuff that's in front of us, the frontiers that all of the entrepreneurs want to pursue, that all of the dreamers see as the opportunity and the hope for tomorrow, that all of the pragmatists are kind of acknowledging is like legit for the first time in our history. That's where I think there's a light kind of rising off this horizon. I feel very good about that. Maybe AOC gets elected. That's just my view on timing where we sit today, sociopolitically.

1:58:18David Friedberg:But I do think that the light is rising in a way that like, everyone's going to have a profound change to their lives in the next couple of years. So I am profoundly optimistic. We kind of talked a lot about socialism and government spending and all this shit today. But my experience on the ground is just like, holy shit. And there's no stopping it. Like this, this amazing, these amazing breakthroughs are here. One of the things you learn when you hire lots of people is that in every change or every announcement you make in your company, or we've raised money or whatever it might be, there's a second question, which is what everyone, all of your team members are actually asking.

1:58:53What does it mean for me? What does it mean for me? And actually on the ground, talking about being on the ground, it's the 63%. They look up and they see trillionaire, world's first trillionaire. They see AI.

1:59:06David Friedberg:Katy Perry with the flower out the window. They see a job displacement coming and then they go, well, listen, can't pay the bills. So what's the mechanism for doing that right now? For helping the people on the ground to benefit from the advances in this technology? What would the mechanism be? 401ks to own this stuff would be what we need to change from a public policy perspective so that they all have direct ownership in these things. And they can look on their phone and see how they're benefiting from... I'll tell you, everyone thinks that AI is going to accumulate to two or three companies.

1:59:32David Friedberg:I don't think that's how it's going to play out. Everyone's using AI and everyone's using open source AI now, meaning every company is going to benefit from AI, which means every company is going to have more money to pay their employees, hire more people, train them up, do other things with them. so i'm like i don't buy into the narrative that dario elon and sam end up having all the value in ai i think the chinese blew that up i think the open source stuff is the best thing to happen doesn't that mean there's going to be a bit of an economic collapse here those data centers still need to exist to run the models are we in an ai bubble in that regard if this this capex on ai if the cost to run a chinese model comes down by some number of fold over the cost to run a proprietary model, I'm going to run more models.

2:00:17David Friedberg:I'm going to do it more. And as I do it more, I'm going to need more compute. I need more data centers. I need more thing to do that. So that's where I should go. By the way, on the data center argument, I totally buy into people's concerns about data centers driving up the cost of energy. The water thing is, I think, BS. But the cost of energy thing, every data center should be on its own grid. And every data center should make enough power, not just to be on their own grid, but to pump energy back into the grid. If you set that as a standard for every data center project in the US going forward, you've solved the data center problem because now you're dropping the price of electricity for everyone in America.

2:00:50David Friedberg:And these data centers are all off the grid. And then everyone can own those. They can all be in REITs and people can buy stock. And many of those are publicly traded. So they should be in your 401k and everyone can own a piece. David, we have a closing tradition on this podcast where the last guest leaves a question for the next guest, not knowing who they're leaving it for. And the question left for you is what is one idea you have that is uncomfortable for people to hear that you don't typically say out loud? I think we should end the federal student loan program in the United States. And I think education costs will come way down.

2:01:23David Friedberg:And the private market will still provide all the student loans that people need. I think if the federal student loan program, because it doesn't discern colleges, degrees, individual performance, I think that by ending that federal student loan program, the quality of education in the US will improve dramatically and the price will drop dramatically. and more people will have access to higher quality education. I know it's counterintuitive, but that's what will happen. It's sort of like, you know, Malay removed rent control in Argentina and rents declined. We've propped up the price of education in the U.S.

2:01:57David Friedberg:with the Federal Student Loan Program. And so the Federal Student Loan Program was replaced by a program that is accountable, meaning the person that's underwriting the loan knows that that loan has to perform, meaning that that school has to be good or that individual has to be doing a good degree. the market will correct itself and people will end up getting a loan if they go to one get one degree versus another so if you get another if you get a bad degree you know pick your basket weaving you know major there's no loan available but if you get a degree in something that might be useful and you're likely to get a job there's a loan available but for those people that can't get a loan because they want to do basket weaving they're going to have to go find something else to do else to do so they might have to go work somewhere else because the alternative was we put them in two hundred thousand dollars of debt and then they didn't have a job afterwards is the counter argument also that the most privilege will get the best education and a privilege can be intellectual privilege or it can be financial privilege but there's there'll be a divide between okay you guys are all going to harvard you still have a scholarship system scholarship system doesn't change you still have scholarships and solve for that and education is with ai is changing as well but you know i'll just say like there's a lot of these universities that get accredited and they provide terrible education.

2:03:10Yeah, that's true. And just give you debt.

2:03:12David Friedberg:And then they give you debt. And so you graduate with a degree from, you know, whatever crappy university or college, but you assumed that because the government gave you the loan, you were going to have a job at the end. Yeah, it's a scam. It's a scam. It's one of the great lies. Imagine if it was all privately funded. There's plenty of lenders. I mean, the amount of money that's going into student loans is actually a small percentage of what's going into home loans. So there's plenty of bank capital out there to fund student loans. So the student loan debt would suddenly become, hey, if you go to this crappy university, we're not giving you$200 ,000 of debt.

2:03:44True. I see what you're saying. It would also force people to pick things that were linked to the employment market versus, say, like basket weaving use as an example. But maybe I'd be forced more into things that had a higher guarantee of return because of the private markets.

2:03:58David Friedberg:And it doesn't mean... It's a retraining mechanism in that regard. It is. And I think this is a great reset that's needed if we got rid of the federal student... because I don't think you can reform federal student loans. It's just too complicated. But if you shut it down, or you transition it over time and let the private market underwrite it, you'd have a better path. David, thank you. Thank you. Thank you to you and your co-hosts on the All In podcast. It's one of my favorite podcasts. So I highly recommend everybody goes and listens to that. I listen to it all the time and it really helps me develop my own perspective on the world.

2:04:25So I really appreciate the fact that you guys take the time to do that amongst your very busy schedules.

2:04:29David Friedberg:Thank you for having me. And yeah, appreciate you coming here today. And hopefully we can continue this conversation once we get more of these answers and the fog clears a little bit. Absolutely. Thank you so much. And I'll link all of your links below for people to go read your stuff. Is there anywhere else in particular people can get more of your content? All In's really where I'm at. Okay. Yeah. Anywhere else? Follow you on social media? Follow me on Twitter at Friedberg. I don't post very much, but that's it. I mean, that's where I'm at. Great. We'll see you then. Thank you. Thank you, David.

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