#21 - David Friedberg

25:01Yeah. The feed, the California train feed, it makes clear that they always talk about jobs, jobs, jobs on that feed, not miles of rail, right? It's like the Milton Friedman thing about the people in China is apocryphal, but they were using shovels. And he's like, why aren't they using cranes to dig. And they said, well, it's creating more jobs. So why don't they use spoons then? So California took that literally and they built less than a mile of track or something later. They put a photo of it. They made the mistake of putting a photo because then it was actually clear amidst all the obfuscation that it was just a giant bribe of blues.

25:35But again, their innovation is not to give a billion dollars to one person, but to split that billion dollars over 10 ,000 people times$100 ,000 a person so that each one of them basically has a make-work job in their political constituencies, right? So that kind of thing, whether it's, another example is the Podesta$376 billion for green stuff, right? Once we realize like the blue business model is capture the state and then capture the money and their version of going public. And you flow the money back out to the people that voted. Yes. That's the model. And I've seen it. If you watch any Senate confirmation hearing, you can observe it.

26:14Yes. Because the questions the senators will ask the government administrator that they're appointing or approving is, I have this program in my state. It creates this many jobs for my state. Are you going to take away that program? That's the number one thing they always focus on. And as long as the answer is, I will not take away that program, they say, great, you are now confirmed. And that confirms that the capital will be sucked up and reallocated back to their interests. And they are competing for their particular constituents to get their flow out of the state. And that is why the state gets bigger and bigger.

26:46That's right. And I think actually one of the constants of that is - By the way, it's socialism. It's government employment for everyone. And we don't realize it. We don't realize how much of the capital is flowing to individual, what percentage of people have capital flowing to them from the state. That's right. And what's happening is there's now two ledgers that have arisen outside the American state, which are China and crypto, which they can't do this in the same way. Because the Chinese have their own sort of sovereign system and Bitcoin and crypto have their own sovereign system. And so because of that, and they've tried with the trade war and with the war on crypto, they tried to shut down these alternative systems and they've now failed, basically declared defeat.

27:24Both Republicans essentially have declared defeat, I'd argue, on China in the trade war. Democrats were defeated on crypto. And so what that means, I'm not saying good or bad, I'm just observing. What that means now is this system has true competition. So all of the failures that you're talking about, like the viral loops and so forth, it. Now, there's a consequence because it can capture the money within its sphere, but it's losing control because more things are exiting its sphere. Once something goes on chain or in China, and on chain or in China, then blue America can no longer tax and control it.

28:00Actually, one thing is, if you notice, quite a lot of blues are just for taxes broadly. Part of it is to attack their hated enemy of the libertarian capitalist tech guy. But part of this also, you know Zuck's thing with intranet.org a while back, right? Well, okay, you know how Google and Facebook have various initiatives to get everybody online, right? Yeah. That's because - Laptop for child, 1 billion others, 3 billion others, all that stuff. That's right. That's right. And I think one laptop for child was actually very successful in the form of the Android smartphone. And that's - Motivated it, yeah.

28:31Yeah, motivated it. That's right. But one of the things we take for granted sort of in So as people of the network, as opposed to people of the state. So roughly, I'd say people of God are the conservatives. People of the state are the progressives, the blues. And the people of the network is tech, the internet that's like us, basically, right? And there's some overlap there. Nothing's ever totally clean. But for us, the equivalent is grow the network, right? That's say more internet connectivity, generally good. Facebook's thing was making everybody connected. Google, make the world's information organized, open source, and so on.

29:04So we want to increase the scale of the network as distinct from the state. That is, in my view, the main counterbalance to the state today. And actually, that exists in the past, but it's the strongest it's ever been in history because it's like formal. That is to say, markets existed, peer-to-peer trade existed. The network is sort of the peer-to-peer aspect of humanity. But now it's like digital and stronger than the state after hundreds of years where it got stronger. In fact, so the New Deal point, because you want to talk about that, right? So why don't you elaborate on that point? And I'll give an observation.

29:33I just think that there was this moment in American history when prior to this moment, America was built on originally a notion of, I would say, rugged individualism, but like shedding the state, shedding the monarchy, moving here, enabling individualism, enabling. And again, I think that collectivism ends up deriving tyranny. In its absolute sense, to have everyone in a socialist system or communist system, really, a true communist system, requires some extraordinary controls and limitation of individual liberties. So the more collectivist you become, the fewer liberties there are, the fewer individual liberties there are, which means the more tyranny there is.

30:19And that's why I just don't think you can have socialism without tyranny. So America was founded on the principle of this true individualism, on this lack of tyranny, this lack of taxation, this shedding of the monarchy, and enabling individual agency where everyone has an opportunity to realize their full potential, whatever they want it to be, because the tyranny is now gone. But everyone also now has accountability. If you don't perform in society, if you don't exceed, if you don't succeed, if you don't meet a minimum limitation, a minimum limit, you're going to be left alone. You're going to suffer.

30:57You're going to struggle. So the question then became at some point that had to break, which was as more people suffer, as more people struggle, there's a moment when that group of people has empathy and they say, we have to solve this problem. And that's where the state flips from being initially a state that is really driven by its limitations, 1 % income tax, we're not going to do anything, the state's going to stay out of your way, individual rights, total freedom and liberty, to we have to do something. The state is responsible for solving the Great Depression. And so the New Deal meant to address the problems of the Great Depression from an empathetic note, which was, hey, people are suffering and there's no other solution in a free market.

31:39The market failed. And there's other external factors that are preventing individuals from just having a basic standard of living. And in that moment, you started the pattern and the progress of the state saying, I can do more and I can provide you a higher order of living and then a higher order of living. And so you went from the New Deal to building highways, to building suburbs, to funding home loans, to funding education, to funding healthcare, to doing literally anything and everything that a politician could dream up to provide a better standard of living for every individual, which fundamentally breaks free market forces and ultimately leaves everyone begging for the next teat to be able to just do anything, which is where we kind of start to find ourselves today.

32:27I completely agree with the diagnosis of where we've gotten to, and certainly in the US. I'll offer a few, given that I'm generally sympathetic to this view, let me offer not exactly counter-arguments, but just alternate perspectives I found to help. Okay. So the first is I think of the last 500 years from 1492 to, let's say, up to 1950. 1492 to 1950 was a period of increasing technological centralization that was offset by the discovery of the frontier. So that is to say, basically, let's say 1492 to 1890, you had the Americas. So you had dozens of startup countries, basically, because you also had the South America, Latin American things, Right.

33:11And yet, you know, North America, there's Canada, there's a French empire, there's all these guys duking it out. And just like, you know, amidst all these search engines, Google won. I mean, it's all these American startup countries like the United States, America won. Right. And so the presence of that frontier meant that there was more productive things happening there, whereas in Europe, there's more in the way of just warfare back and forth. In fact, like the Puritans actually left the conflicts of England. In fact, at different points in the English Civil War, the left side went to Massachusetts and the right side went to Virginia.

33:49And so the various, you know, the roundheads went to Massachusetts, the Cavaliers went to Virginia. And then 200 years later, they had another civil war in America. And now 200 years later, we're having another, the Cold Civil War, basically between the same sides, like deep cultural history. Right. So in some sense, you know, people have said the American Civil War is actually about the English Civil War. Right. These two types of things fight. OK. So but on the point about FDR, there is I'll give a partial granting everything you're saying. I'll give a partial qualified defense of FDR from someone who's as critical of him as you are.

34:21And by the way, I'm not being critical in a sense that it was the wrong decision. No, no. I'm just highlighting at some point there's a moment where a civil society recognizes the needs of a certain percentage of the society. Absolutely. And then they try and organize. And the typical organizational model is the state to solve the problems of that particular part. But the problem is once you crack that egg, there's no putting it back in the shell. That's right. So here's a few things which at least were helpful lenses for me. The first is FDR was the least bad communist dictator during a period where technology favored communist dictators.

34:55Right. Or if you include, let's call it collectivist dictator, you include Hitler and so on and so forth. So Hitler, Stalin, Mao, et cetera, et cetera. FDR was like the least bad. Yeah. Right. So he only implemented like 90 % marginal tax rates, not 100%. Yeah. He only implemented the Japanese internment camps, not the gulags or the concentration camps. Right. That's faint praise, but it's true in a sense that he was like the least bad communist dictator. And in fact, there's this great book called, gosh, it was like Three New Deals. Yeah. Have you seen this one? Okay. You'll like this one. Yeah.

35:25It actually shows how FDR was actually enamored with Mussolini and Hitler and so forth before World War II. right? There's a lot of influence from both the Nazi and Soviet side prior and vice versa. Like American ideas went to Germany, went to the Soviet Union and so on and so forth. Okay. So, but I would argue that the FDR thing is actually part of a broader centralization arc. For example, 1865 was the moment when people said the United States is, as opposed to the United States are, right? So Lincoln was another force of centralization. 1776, actually really 1789, you know after the American Revolution look less well known as something called like Shays Rebellion right yeah where people essentially tried to invoke the same American Revolution concept of the right to break free and then George Washington put it down right he said actually you can't exit anymore right so there was a centralization arc not without its reversals and so on but broadly centralization up till 1950 both in America and actually outside why she had like the unification of Italy by Garibaldi you had the unification of Germany you had the the French Revolution and the The thing about the French Revolution is normally you and I, many people like us think of leftism as something which just disorders society, makes it chaotic.

36:37Think about the guillotine, think about the chaos of the French Revolution or the chaos of the Russian Revolution. But there's one thing that we have to contend with, which is somehow out of that chaos, they fashioned this crazy organized military machine, which eventually Napoleon's army or in Russia after the Russian Revolution, the Red Army. Yeah. So normally a company, for example, that's truly in total chaos. Right. Just can't do anything. It just collapses and everybody quits. Right. But there's some underlying logic to leftism. And it's neither something that the left nor the right talks about.

37:09I think the left will say it's all sharing and caring and the right will say the left is naive. But really, I'd say the left is just like a Voltron death beast. okay it's meant to take large numbers of people unify them into like a voltron yeah and then laser eyes just become a killing machine right and then basically force that's what common vacuum to vacuum to right so it would flip country after country into communism pull them into the envelope right yeah and then turn them like into conquerors and so on and so forth right so if you think of it as like a, and there's a lineal relationship to basically Abrahamic religions like Christianity and so on and so forth.

37:49It's evangelistic. It's egalitarian. Everybody must be converted. If they don't convert, they will die. You know, they die by the sword. They live under our rules. We know what's good, right? There's something there to that, right? And that's got a power to it because it's evangelist. By contrast, when you compare it to the alternative, if you're just stay at home, like think about in our tech companies right um you know there's various people who have at various points uh champion lifestyle businesses but lifestyle businesses are basically almost as hard to run as like a big business because you're still a ceo you're still responsible for everything you have no one you can't sleep because you can't delegate to anybody right lifestyle businesses mean the business is your life right there's no possibility of an exit and you can get crushed by somebody who's just playing for getting big and they build this giant unicorn they can take your market there's no non-linearity or yeah yeah exactly and so that's actually what happened with all the places that tried to not play the big guy game all the city states got rolled up into nation states yeah that's right that's right and so like ever been to san marino i've not been okay so that's this amazing like duckbilled platypus you know it's like it's like a it's like a missing link you know kind of thing like a duckbilled platypus it's like it's like a mammal that lays eggs a rare kind of so san marino is a rare city state that survives to the present day because Garibaldi took refuge in San Marino when he was unifying Italy.

39:06So he sort of spared it from forcible unification, right? So it still has its own UN membership, its own sovereignty that's jealously guarded through the years, right? And it's like this 30 ,000 person thing, right? So it's a piece of the past that is still here. So the reason I say this, once we understand, in my view, the logic of it, there's this technological centralizing force, but the frontier was the alternate geographical force that was like a pressure exit valve, right? And so that's why lots of Europeans left Europe for America. So they want to leave the wars of Europe. They want to leave the revolutions of 1848.

39:38They left the Irish potato famine. They left all kinds of things in Poland, Italy, all kinds of chaos, and they came to America. Okay, fine. So then at 1950, I would consider that historical peak centralization. You had the minimum number of political units ever, like about 50 un members right and because you had all these giga states like you know the ussr and china that just formed and obviously usa hundreds of millions of people under one banner and uh it was a time where there was like one telephone company and two superpowers and three tv stations and then the transistor was invented and that began a rapid decentralization arc that's occurring almost 10 times as fast as the centralization arc so you go rapidly transistor and you have like cable TV and you have the personal computer and you have the internet and you have the smartphone, you have cryptocurrency and you have open source AI models.

40:26And zip like this, we're unwinding several hundred years of centralization in several decades of decentralization. And so that's why I think the Western state is going to lose to the network. It's just like if I track various metrics of state capacity, if I track all that stuff, it seems to go away. Let me pause there and I'll give one more argument. The Western states are going to lose to the network. Yes. Meaning, what I mean by that is, for example, the S &P 493 versus the Magnificent Seven, all of the legacy American economy is basically being shut down. And it's all going towards internet companies.

41:04Or the money is going towards digital asset treasuries, which are like internet currencies. Yeah. Right? And you can see this, like, whenever anybody was giving me the bull case on America, the part that was worse. was the internet. But the internet, in my view, is as American as America was British. It's version 3.0. Do you think that the current government, the current federal government, the Trump administration, and the effort to re-industrialize manufacturing in the United States with government support creates a different environment that actually gives them a shot? I like a lot of these people.

41:43I think they mean well. And I really think they mean well in the sense of I don't think they're doing the profit maximizing thing and so on and so forth. But I don't think it's going to work for, in fact, I already think it's kind of, or at least like this, there may be some long term success that comes out of it, but it's not going to work on the timescales that people think it's going to work. And it's not going to work to save the political entity, like in the sense of, you know, the USSR was a political entity that did not survive. Of course, the land survived. The people survived. Russia exists, right?

42:14Ukraine exists. Estonia exists. There was essentially a national bankruptcy. But if you're right about the digital, the network state, there's still a demand curve that is unmet for energy production, energy capacity, which has an inherent kind of economic driver, has an inherent kind of economic stratum. There's infrastructure, there's layers that need to be built, and that's inevitable. If what you're saying is true, and also if what you're saying is not true, it's also inevitable. Well, I guess - Or do we just stall? Does energy become the competitive force? So there's several kind of layers.

42:52I think the first thing is, I just start always with calibrating with numbers, right? And very few people who I talk to about re-industrialization and so on, want to really engage with the reality of what China is. Right. Yeah, it's two terawatts going to eight by 2040. While the United States is one going to two. If everything goes up. And by the way, the China 2 to 8, they're outpacing forecast. And they have several new energy technologies that didn't exist in the original forecast. And they don't have anti-nuclear activists. And they're doing both nuclear and solar. And America is doing neither nuclear nor solar.

43:32The nuclear rollout is insane. It's insane, right? So energy is one piece of it. But really what it is, is the high-tech part is absolutely one lens on it. But let me look at some other lenses on Chinese society, right? So first of all, they've got intact families, right? They've got the kids going to school. They have, you know, basically like no crime, right? They have like gleaming cities and like the public infrastructure is there. They don't have like graffiti and, you know, on the subways and stuff like this. The train station looked like a spaceport. Yeah. Star Wars, that new video that came out of that new train station that opened up.

44:08Now, the thing about this, by the way, is like the Chinese people really suffered to get here. Like their last 200 years were complete Mad Max. So even if they got to suffer for the next decade, they're okay. I mean, they could take some hits is my point. Yeah, exactly. There's people who have grown up with like basically going through the cultural revolution. Like their boomers did not have a great 1960s and 1970s. There was not some real love for them, right? So they're just - Any environment they're in today is better than where they came from. Exactly. They're kind of, at least among the older generation.

44:37Some of the younger ones have only grown up in a China, which just is amazing, right? But there's a consequence of that as well, which is they don't look up to the West. They think there's a Chinese version of almost everything the West has that's often better or even ahead of the West. China has flying cars, Ehang and all this stuff. And when I post videos of this, people will say, I post this video, which is like, we want to fly in cars. We got them with Chinese characters. It's kind of like it's a riff on the – So Ehang, it's basically like giant quadcopters. It's like the iPads are scaled up by a phone.

45:09Yeah, yeah, yeah. So this is like a scaled up DJI. Okay. And people would say things like, it's not a flying car. It doesn't have wings. It's not a flying car. It doesn't have wheels. It's not a flying car. It only does short hops. And I'm like, you know, they're stuck within a box where they refuse to, or when I show videos of the Chinese cities. I'll give you a statistic. In 2015, 10 years ago, papers published by Chinese research labs and major scientific journals were about half of the United States. Now 50 % more than the United States. And in every category, almost life sciences and about to cross the life sciences probably this month or next month.

45:43Every category, material science, physics, math, computational science. They do not have the wokefication of education that happened 12 years ago. I think people talk about a pipeline problem. I think part of the issue is something really happened to American SAT scores starting around 2013 or so. You can see them drop off like this, especially among white American kids, it just drops off. And I think wokefication is part of it, like why now 10 years later, there's grads who are less there. Others will blame it on phones. One of the things, by the way, that's going to be a big thing. The anti-tech movement in the US is going to be very big because the left is against capitalists.

46:25The right isn't as fond of immigrants nowadays. And the center, like Jonathan Haidt, who I like, he's a smart guy. Jonathan Haidt, to some extent Derek Thompson, other guys like this are starting to blame it all on the phones. And in fact, there's even tech people who are like, oh, tech is bad. I mean, AI is the new climate change. Yeah, exactly. But the issue is, and actually here's, I think, a point, which is post-libertarian. I like this frontier of post-libertarianism. So which is accepting all the premises of libertarians and then say, what's next? So the moderated internet, like one thesis is - By the way, I want to come back to China, but yes.

47:01Okay. So one thesis is the unmoderated internet is a problem, not the internet. So then the question is, what does it mean for a moderated internet? So China has a moderated internet, right? Because of that, they won't have millions of people cheering an assassination or something like that. They won't have drones being scripted on their soil, right? Because they can just block an internet at the firewall level. They have this constant digital borders that I actually think is ahead of its time, where they think they treat the digital as being on par with the physical. And they're also insulated from a lot of the chaos in the Western world because everybody speaks Chinese, they're only listening to Chinese stuff, and all that stuff is coming through translation and most people aren't paying attention to it.

47:36It's like seeing a war and everybody's yelling in Arabic and you're not paying attention to it in the same way, whereas the Ukrainian war, people were yelling in English and people were more empathetic to it. So China's insulated from all the chaos of the world in many ways by this border they've built. And I think that is underestimated in terms of how much stability it gives them. But the problem is that for the Western mindset, they'll immediately say, well, I didn't consent to that moderation, given that we've just been through four or five years where we had to fight for free speech in the Western context, right?

48:06So I think that the thesis, antithesis, synthesis is consensual moderation. Opt in to a society, because in the absence of moderation, you get American anarchy. In the presence of non-consensual moderation, you get Chinese control. But the third concept, the internet intermediate, is you opt into constraints. Why doesn't choice work? Why doesn't choice work? That is what it is. That is what choice is. Yeah, but I mean - Why is no moderation work? Why is the American system necessarily anarchy? In the sense that - Oh, here. Because I can watch a conservative media. I can watch a liberal media. I can watch an independent media.

48:41Yes. I have choice. And so what drives my orientation to aggregate? What drives power accumulation in media when there's a multiplicity of options? I'll give several. So this is basically going to be like, this is the argument that is going to be had for the next whatever number of years, right? But let me give an argument as to why American anarchy won't be desirable. The very simple argument is going to be the mass exodus of Americans from America. Like that's already happening. You're seeing it in Europe. It's happening first in Europe because Europe and America are not like separate entities.

49:15The G7 is all having sovereign debt crisis at the same time. Lots of Brits have left Britain. So many French have left France that they're trying to pass this Zuckman exit tax where it's like, oh no, it's a wealth tax. It's a wealth tax, yeah. More than 2 million euros, you're taxed some crazy amount. So essentially, the more people leave, the more grabby the state gets, which makes more people leave. And it's a negative feedback loop. And eventually, everybody's going to get super mad. This is when the original feedback loop pops and the reverse happens. Yes. And very few people understand the history of communist societies.

49:44The reason the Berlin Wall was built is that all of these people left communist East Germany for West Germany. And then eventually, the East German government was getting embarrassed by this. They're losing all their doctors and so on. And they said - Is Mamdani going to build a New York wall? A digital version. Digital wall. Why? Because - Tax. Exit tax. Exactly. Exit tax. That's absolutely going to come, right? They've already passed something like - or not passed. They've proposed, if I get it right, there's some referendum in California where if it passes in 2026, it was proposed on some date in 2025.

50:16And every one of 200 billionaires who is resident in the state, and they have a list, right? The 200 billionaires who's resident in the state in 2025, they have to pay a 5 % net worth. Yeah, it's called the billionaire tax. One-time tax, right? One-time tax, 2026. But here's the thing. It is designed, first of all, it's a very bad, like, it's like this crazy Ayn Rand villain kind of thing for several reasons. First is, it's evidently passed by a referendum in 2026 that's binding on 2025. Correct. And it's a constitutional amendment. Right. And so if the price of that exit tax is set on the price of the assets in the year 2025, but the value of the assets drops in 2026, it could be 20, 30 % of their assets they have to liquidate.

51:04Now, these are billionaires, which means they're running big companies, which means that there's an obligate liquidation event where as soon as that bill was proposed, these 200 offices of these guys who are running major companies, include Zuck and so on and so forth, are asking, does Zuck need to – I don't know what this fortune is. Let's say it's$100 billion, right? Does Zuck need to sell$5 billion of Metastock in order to have the cash on hand in case this bill goes through next year? So almost with certainty, some of those several hundred billionaires will have to do mass liquidations of mass amounts of stock this year, crashing the market, just in case that bill passes next year.

51:44Right? Tax the rich? What do you mean? What's the problem? Yeah, exactly. We're trying to eat the rich. What are you talking about? It doesn't bother me. So I'm all for it. Once it hits my number, then I'll pay attention. Okay. Exactly. By the way, the income tax in the US is also set up supposedly only for the rich, right? It's for the rich, 1%. And it's like, it'll never hit me. That's right. Now it's like 40 % if you make 60K a year. That's right. And with inflation, everybody becomes a millionaire and then a billionaire. Yeah, yeah. Exactly. So this is what I'm saying. It's not miles or meters and kilometers.

52:15It's gallons and ounces. What are we really talking about? That's right. So if we take America and Europe and actually Japan as one whole, all of them, the US, the UK, Italy, Germany, France, Japan, they're all seeing yields soar like this. Correct. As Chinese yields are going down like this. And so that means people are selling treasuries. They're buying Chinese bonds. They're buying gold. They're buying digital gold. Yeah, exactly. That's right. So that is the sunsetting of the American empire, basically. And I think that - Okay, so let's be optimistic. Okay, so our friends in this administration, of which there are a lot of tech friends.

52:53I love these guys. Progressive. Yes. Working their asses off. Yes. Optimistic. Optimistic. And our friends in the private market. Okay. What would they do? Okay. First. And what – so let's say you weren't building network school, network state activities and you were put in the seat and you had imperial authority. Okay. Save the American empire. Save the American republic. Okay. So let's say – Without a revolution where everyone's like – Totally. Totally. So let me give the preface that what you're asking me to do is be like Gorbachev or Yeltsin. Okay. So that's to say - This administration is willing to take aggressive action - Fine, fine, fine.

53:34And take it all the way to Supreme Court every single time - Great, great. To ensure that they can take the action. Here we go. So A, freedom cities, right? Establish, basically there's - Trump has spoken about this. Establish bills where states can designate special economic zones or a version of that, the Americanized version, special Elon zones, right? Not specifically for Elon, but it could be a Palmer Luckey zone for drones. It could be an Elon zone for robots. It could be a zone for biotech, for Illumina, for example. All of these different zones, which once they're there, remember the thing about having states bring local funding to them?

54:14Now, once you've got a center of excellence, and let's say it's in Pittsburgh, or let's say it's some red state where the governor and so on are friendly to you. right? We just saw one in Akron, Ohio. Great. Okay. So let's say it's Texas. Okay. So Texas, you have University of Texas and you have Texas state government and you have quite a few entrepreneurs in Austin and so on and you have Starbase. And so let's say it's a manufacturing zone. Okay. And you know Burning Man where there's just absolutely nothing there, right? The less desirable the land is, the more desirable the land is. The reason is because nobody cares about that.

54:51No incumbency. Yeah, there's no incumbency. You take drone shots of it. You show how completely barren it was. So then you fence it off. And then you essentially admit people into this fractal frontier. And they're signing away a contract. And basically, you have new regulations here. There's no OSHA. There's no EPA. There's none of this stuff. And you have to figure out what pollution laws there are, what labor laws there are. You have to have some sensible rules. Necessarily deregulate is critical. Exactly. Minimum necessary. You're defining a mechanism, but ultimately dereg. Yeah. So the key thing is, to be clear, you're not going from insane bureaucracy to total anarchy.

55:33Instead, what you're saying is, clearly these laws have been abused, but clearly also there was some good intent at some point behind them. So therefore, how do we preserve the spirit with the minimum necessary edits, right? And often the answer is to have it supervised by, let's say, Texas state, as opposed to the federal government. Simply having regulatory competition works wonders. This is actually one of the secrets of the Chinese system. They have competition between states. When the American system was working, it was the laboratory of the states. You had federalism. Once it became too centralized, as you point out, then that went away, right?

56:05So really, we're saying restore the 10th Amendment, right? Bring back competition, all rights, not reserves to the federal government, go back to the states, Right. So Tenth Amendment activists are even more important than First or Second Amendment activists. OK. Right. So, moreover, you're not going to get resistance from the Democrats on this. Why? Because they're doing the blues are doing soft secession. Right. They've talked about this. The brown states. That's right. So finally, you've got an open door where if you do think blues are going to get back power, which they probably may, at least partially.

56:34Right. You have an open door where they're actually also agreeing on this, where you can push through Tenth Amendment, Tenth Amendment and establish facts on the ground. Like the moment you have factories there, you have buildings there, you have a regulatory authority that was granted to UT and to local Texas entrepreneurs and scientists and so on. And when they have authority that supersedes that of the federal government, it's very hard for the next FDA or EPA to come in and say you don't have that when it's in like 10 different places at once, right? You just smash the Triforce into pieces and you distribute it to the individual states, right?

57:10This is the only thing I would focus on. Yeah. decentralization, right? And the reason is now you've got a fighting chance. Why? Those freedom cities will attract capital. They'll attract talent. They will be secure because they can be either... One issue is states don't have secure borders, right? Why? Because of all the illegal aliens and so on and so forth. But on private property, even in San Francisco, it is still allowed to... For whatever reason, you can't get a homeless drug addict out of your garage, like like your door sill in a in a In a restaurant in San Francisco, they can be sleeping in your door sill.

57:49But if they're inside an office building, at least private property is respected in a certain way, even if public property is not. It's just an idiosyncrasy of where America is today. It may turn out, by the way, that in blue states, that last barrier falls. And they let the homeless squat because the squatting laws. Well, there's a lot of squatting laws. Yeah, exactly. That's right. So they just let the homeless squat in your garage. They let the legal alien suit. So it's possible in blue states, it just completely goes away. But in red states, at least, you start with the sacrosanct nature of private property.

58:20And you start having these things. And you can do something where some significant fraction of the equity, by the way, even 51%, like non-voting state or something like that, goes to the people of Texas or something along these lines. So they're all getting a cut. You could put it on the blockchain so they know exactly how much they're getting because you can microallocate like 50 bucks or what have you. So you make it rain for individual Texans, right? Because if it's a billion dollars, like what's the population of Texas? it's like 30 million i think something that's right so that's right right so billion dollars that's actually you know that's pretty good right um if it's uh if you're getting a hundred bucks to every person in the state if you're getting generating three billion a year from this like it's actually kind of amazing or i mean do you really need to if suddenly job growth i mean this is the economic course as well well i i think you do and the reason i think you do is I think it is surprising to me how much people even having$100 of Bitcoin gave them a rooting interest in Bitcoin.

59:16It's like actually crazy how much it really changed their kind of impression. So if you have like everybody holding like$100. So the Freedom Cities. Freedom Cities. Anything else? Tenth Amendment. Dereg. Special Economic Zones. And the deregulation, it's more than a small thing. It's actually, if you want, no reindustrialization without deregulation. Why? Because the problem is not like the difference between regulation and taxes very very important why or tariffs a tax is continuous. I know I can you pull up the chart of China's nuclear cost. Yes versus the US. Oh, yes crazy thing. Yes, I think we should look at that so that shows that like basically This is a minfrey this this speaks to the the importance of D-rec Right.

1:00:02Because I think ultimately the most and everyone can argue all day with that solar, which is fine. But put solar to the side. The scalability of power production with nuclear is extraordinary if you can get speed up, cost down, which China has done. So they have, I think, 400 nuclear reactor sites in construction right now. You can kind of think about each one of those being one, maybe one and a half gigawatts. Suddenly, that's 60 percent of the U.S. power production capacity being built right now in just nuclear by China. Yep. And then you add on the Gen 4 systems, which they demonstrated two years ago, which are honestly engineering marvels.

1:00:37They're incredible. This is like the graphite balls. They're really in a cone. Yeah. And it's helium gas that heats up. And so there's no meltdown risk. It's totally safe. The graphite balls can't overheat. I mean, nothing about it is it's designed to be stable. It's designed to have like everything breaks. No one's around. Nothing happens. and the efficiency to build it is like if you look at the raw material cost it's nothing like it's so little and then obviously they just put their first thorium molten salt reactor into production into turn the power on this week oh is that right yeah so uh and they have insane like reserves in thorium right like 10 000 years 100 000 or 10 million years whatever the number It's insane.

1:01:19There's a Saudi Arabia of thorium. And they found a load in China. So anyway, so the point is like because they've enabled and unleashed. This shows it's physically possible. It's physically possible. Right. And the raw material cost is a fraction of what you're seeing here. Absolutely. There's still a heavy regulatory cost here. But the exponential, like the compounding effects of the regulatory processes in the United States is what's driven these costs. Absolutely. And that includes regulatory and labor, regulatory and material, regulatory and sourcing, environmental, et cetera, none of which on their own you could point to and say this is fundamentally the problem.

1:02:00But let me ask you the question. So now the federal government is taking action. Our Trump administration friends are taking action to say we want to take an active role in driving these outcomes. So they're putting capital into businesses. Capital doesn't matter. And here's my argument. like the entire thought that this thing is capital limited is wrong and the reason it's threefold first is um regulation is like a zero one as to whether something's possible or not right and um you know for example like can you do your body your choice in biomedicine like can somebody take a drug or not no you have to go through this entire fda process that's multiple years that is not how benton best developed insulin for example right um did the wright brothers get FAA approval before they flew?

1:02:45No, FAA didn't exist, right? Like if you actually go back and - Did Uber get a taxi cab medallion? Yeah, exactly. That's right. So this entire process of regulatory croft that's accumulated on things, what you want is zones where you can move at the speed of physics, not permits. And then you just have somebody exercise their judgment in that area. And you have a large, I don't know, blast radius if you want. I mean, for the most part, nothing is going to go wrong. I should say nothing will go wrong. Let me clarify that. There will be risks. Lots of things will go wrong, right? Because just when you're pioneering, things will go wrong.

1:03:22But everybody in that zone takes those risks, right? No plane crashes, no planes. No train crashes, no trains. Yes. And if there weren't any large effect-sized drugs, there'd be no side effects, right? So these zones are the risk-tolerant zones, the frontier zones, the fractal frontier. or bring it back to the earlier piece, right? And the deregulation is there. Like as an example, the NSF acceptable use policy. You know what that is? Acceptable use policy. I don't know. This is actually one of the most important acts of deregulation ever. Why? Acceptable use policy. Here's why. Until 1991, or 1990, 1991, the National Science Foundation had an acceptable use policy that only allowed use of the internet for academic and military and educational use, right?

1:04:10Because, remember, it was developed as, the internet was developed as something that could get hit by a nuke and still survive, right? And it was like an educational network between universities and stuff like that. And there's this debate as to whether to allow commercial traffic. And they said, no, if we allow commercial traffic, there'll be malware and spams and scams and porn and so on and so forth. And of course they were right. They did get all of that. But basically with the fall of communism also was the rise of internet capitalism. In that year, in that period, you had the repeal of the acceptable use policy and the legalization of commercial internet traffic, which began the dot-com era, which led to the last 30-something years.

1:04:48So that's a great example of a zero-one. No amount of capital would have solved a ban. Another example is, in a sense, what was just holding back China was regulation in the sense of the death penalty for capitalism. Like pre-Deng Xiaoping, you'd get executed for practicing capitalism, right? So all the focus on tariffs and taxes, the reason I think that's wrong in my view, tariff taxes, capital is wrong because that's just a percentage. Like if I'm selling a widget for a hundred bucks, maybe lower taxes, it goes from a 10 % to 5%. That's an optimization on the margin or even a tariff. Okay, maybe I get a little bit more of the market and I get a 10 % bump in my revenue.

1:05:28Maybe if all goes, and that tariff has to be there for a long time and so on, right? So tariffs and taxes and even capital, the problem is the cost of building things in the US is this graph shows as lots of where things go. It's not like 10 % more than China. It's like 100x more than China. It's 100x slower than China. The reason for all that is all kinds of labyrinthine process and bureaucracy that you just have to be able to scrap totally and look at exactly how just another part about it is, and this is the hardest part, honestly, humility. like in the sense of China is better in many ways in the physical world.

1:06:00America can and should learn to copy China in a way of recognizing they're ahead in many areas, right? And what's funny is actually in many ways, the last 10 years, we're implicitly about copying China. You know why? The Democrats tried to implement censorship and so on and so forth. The Republicans have tried to implement industrialization. Both have been obsessed with Taiwan. In many ways, it's sort of like they're trying to be out China, China, but it's like a bad fit on top of the American chassis. One thing I hear a lot is China wants to beat or destroy America. I don't think that's true.

1:06:40But let me give it macro on why people think it's true. So the V1 is essentially people thinking that China is still Maoist. Maoism was a particularly insane variety of communism. It was like psycho, even relative to Marxist-Leninism, right? This was like the agrarian, eat your eyeballs, most psycho version of communism. It led to the Cambodia, kill everybody with glasses kind of stuff or whatever, right? And then when Deng Xiaoping took over in 1978, he actually, it was basically a coup, okay? Because Mao's wife and the gang of four and Mao's inherited successor, he basically put them on trial, right?

1:07:20Because it was simply Similar culturally, the end of the Cultural Revolution was similar to the end of wokeness. Everybody was just tired of 10 years of absolute chaos and pandemonium. And they're like, let's just make money, right? We've done this communist thing forever. The issue is this, neither the communists nor the far left or the leftists in America, nor the American right wants to admit that was a coup. You know why? Why? Because the Communist Party in China wants to say the Communist Party has continuously reigned over China. Right. They don't want to say Deng Xiaoping was a coup. Okay.

1:07:52The American leftists want to say China is still communist because they're taken in by words and symbols, right? So they just see the hammer and sickle. They're like, they must be communist. Yay, comrade, right? So they want to claim them as their guys, right? And the American right wants to – they only see the thing communist and they're like, these are – they've been inculcated to think the label is always the same thing as what it says, right? In many ways, China is nationalist, but they call it communist. One way of seeing that very clearly, Mao had this whole campaign against the four olds, right?

1:08:26Like among other things like filial piety, like all the pillars of traditional Chinese society, you're supposed to smash them and so on and so forth. And Xi is all about the great rejuvenation of the Chinese nation. 5 ,000 years of Chinese tradition and so on and so forth. You're supposed to exalt. This is essentially without saying it, this is the new Chinese emperor, right? Right. And so they still keep the label communism. Actually, you know, on a website, we can do a front end change or we can do a back end change. Right. A front end change is very visible to everybody. A back end change. You keep the front end, but the back end is completely changed.

1:08:59China did a back end change. Intentionally. So that when you swap from, you know, some weird thing over here to Django to Rust, you don't have to change the website at all. It can be completely just everything just speeds up and moves faster. So I think the issue with this is that because the communists, the Democrats, and the Republicans all for different reasons want to maintain that China is still Maoist, right? It is very hard for people to see clearly that that was actually a total disjunction in Chinese history. This is also – some of the naive things people say is like, oh, the Chinese think in centuries.

1:09:37They definitely don't, right? Like the last 100 years was total chaos in China, right? Chinese people are human just like anybody else. But once they got really great leadership in the form of Deng, who basically set up the current system, they just went on this complete explosion. It's actually crazy, by the way, because he was like 78 years old when he took over. In his own way, Trump is very energetic late in life. Like for Deng to be able to run China and do a turnaround of China from what it was from 78 to 92 is actually crazy. Pretty crazy. Crazy, right? Yeah. But coming back up. So that's my – What's the motivation today?

1:10:13What's the motivation today? The CCP is sitting there. Oh, yeah. What's their motivation? So they've got their five-year plan. Yeah. What is the West – what is the American left and right – Where are they getting wrong about? Have right and wrong about the mindset of China and, you know, the – So the Ducydides trap question. Yes. Like how much do we really have a trap? It's a great – all this is great. And how much of this is illusory? Yes. Okay, great. So there's a guy in Asia Times named Han Feizi, who I find a very insightful writer. He's a little bit of a troll, but he's actually very numerical in a way that's unusual among Western columnists.

1:10:57This is one of the biggest things about good Chinese writers, how numerical they are. Like a good tech guy. You know how like the good updates which we get from - That's right. I think you and I are very numerical, like charts, graphs, we calibrate in this way. And our founders who give us good updates have numbers, not just letters, right? You need both. Give me the empiricism. I'll tell the story. Yeah, exactly. That's right. So Hanfei Z in Asia Times had a good concept a while back, like a few months ago, which is basically that, and it kind of compliments it. I'll add to one idea of my own, right?

1:11:30He essentially said, China executed so fast that it went from being a threatening challenger to just totally dominant. So it obviated the vicinity strap by just rapid execution. And so now it's cranking like 300x the number of ships the US has. It's got so many ships, so many planes. It's adding five terawatts of power when we're adding one. Exactly. Yeah, that's right. It's accelerating. It's accelerating, right? So you only have a war when both sides think they're going to win, right? And Hegseth, for example, is actually quite a smart guy. So on the Sean Ryan podcast last year, he showed he was aware that Chinese hypersonics could sink every US aircraft carrier in the first 20 minutes, right?

1:12:11And other people have said similar things, like the Pentagon Govini study showed that the Tomahawks and JDAMs are made in China. There is no war with China. There is no war with China. It's basically all fake. All the military spending is basically, you know, the Raytheon CEO said you can't decouple from China. The Secretary of the Navy said China's one shipyard makes more than all American shipyards combined. I mean, the entire concept of there being a military economy that's distinct from the consumer economy comes from Hollywood movies, but it's wrong, right? The military economy is a subset of the consumer economy.

1:12:40If you can crank out lots and lots of cars, then you can repurpose that to crank out tanks, right? So China has – like you can't fight your factory, right? And even people who think it's like a high-tech competition on AI, China is at least at a tie, if not more, on AI. Yeah, I mean, what I hear is they'll be allowed to publish papers, and I see this in science because I track a bunch of different disciplines. But, like, they're always publishing right before us, right? And then they don't publish beyond that. There were some papers that were published that were very far ahead. I won't mention what they were.

1:13:15And they stopped publishing? And they stopped publishing. Yeah, yeah, yeah. Probably something. And so they get turned off. So basically it sounded, what I heard was, like, you know, the party saw, party leadership saw that they were getting too far ahead. Whoever is monitoring this said you're publishing too far ahead. You have to stop publishing. Yeah. So because the individual scientists, I think in China, still very much want to have their knowledge on an international stage. They want to be individually recognized for their work. They are prideful scientists. They want to have an impact on humanity and the grander scheme.

1:13:45And they don't just think about the United States. They think about the world. And as a result, they want to put stuff out there. However, the risk is tipping the United States off on how far ahead they are in some disciplines. That's right. Which is rather substantive. Yes, that's right. And basically, I mean, that is the trade-off. In China, the collective does take precedence over the individual. And there's a leftist version of that, which is bad. But there's a nationalist version of that, which is at least arguably good, right? In the sense of, I think, up until, let's say, up until you get to the 98th percentile, China is a good life for most Chinese people.

1:14:20However, once you get to the 98th or 99th percentile, now you're surveilled and tracked and so on, right? So China is the best for the most, but the internet is the most for the best. Yeah. Right? So they say, once you get really good, you're Jack Ma or you're somebody like that, then you need to get out of China or you need to be like, yes or no, sir, three bags full store on everything the party says and does, right? So it's an interesting kind of trade-off where up to like, let's say, upper middle class or something like that. You have instant delivery of everything. There's no crime. The Chinese cities are glowing at night.

1:14:55There's books, literature, whatever you want. Everything is there. And people, for the most part, by the way, the way that the censorship in China works is you can, for the most part, say what you want. What you can't do is you can't organize groups to block a bridge, for example, like they do in the US, or to throw stones and so on and so forth. and the party actually takes all of that feedback and they use it to try to like if they see a lot of anger on something they might censor it but they take that as feedback and they use that to try to like cut it off later right i'm not saying they're good i'm just saying they're very effective at what they do um and but i want to i want to address one of the other parts i just want to know the mind is the mindset we need to destroy the united states no and do we need to we need to beat the United States versus we just need to be self-stable.

1:15:46I think that in 2025, it may actually have gotten to they do need to beat the United States. But let me explain what I think the history was. And again, I'm only coming to this from 10 plus years. What I do is I read Russian news in translation. I read Indian news. I read Chinese news in translation because I feel that that gives me more signal than just reading WSGA, New York Times, blah, blah, blah. In fact, I don't even read like X plus Weibo, which is like Chinese Twitter and a few other things, you start to actually get a map of the world where you're seeing lots of events, by the way, that other people aren't even talking about, right?

1:16:23Okay, fine. So here's my rough narrative of how China sees it. And of course, China is a huge place with a billion people and people have different views, but let's call it the center of mass perhaps. For about 37 years, from 1978 to 2015, China grinded in factories while Americans were watching Friends in the 90s. At every step there, you know how a great founder will give up some degree of money to preserve control? China would always preserve sovereignty, even if it may take worse economic terms, right? And so they would just do the tougher jobs, the more polluting jobs. They took the pollution.

1:17:06They grinded, grinded, grinded, grinded for generations, right? Decades. And then they kept executing. A huge break for them was after 2001 with 9-11, then all the eyes went off China and just to the Middle East. And China had years to just kind of grow and just stay out of all of the Middle East stuff and Iraq and all that crazy stuff, right? And then only by 2015, so there was a critical moment. There's an important graph, important paragraphs that I can show you here. This was US media revenue and they were doing great. And then Democrats, which is basically the media, it's a big part of it, was they were disrupted by the rise of the internet, people on Facebook, right?

1:17:58And so this happened right after the financial crisis. And so we just, I mean, a 75 %-ish drop in like just a few years, that really hurt them and they blamed us for that, right? Okay. So the internet disrupted, it's called Blue America or Democrats. At almost exactly the same time, China, over here, you see China rise and disrupt Republicans, the manufacturing, right? So in 2010, basically you realize it's a forefront conflict. Right. And this was unlocked in the early 90s with admittance to the WTO and trade freed up. But really. But the main thing about it is we have to remember also, and this is not, people are forgetting these parts of it.

1:18:38China, there's a strategy to admitting China, which was like George H.W. Bush put all these listening posts in Western. This is now being revealed. One of the reasons that George H. W. Bush didn't go harder on Tiananmen is because the U.S. was using Chinese listening posts to listen and eavesdrop on the Soviet Union. And so they had all that huge border that they have with the Soviets. They could get all the signals intelligence from there. And so China was a military ally against the Soviets, which were a much bigger threat. And they were just making widgets and so on. So the leadership at that time wasn't dumb.

1:19:17They were just triaging and prioritizing, like turning China from an enemy and a nuclear armed enemy at that into, if not an ally, at least somebody who's making widgets and at least fighting your enemy's enemy is not a dumb move. Right. Then they leave it to later leadership to figure out the next competitive move. Right. And so moreover, actually, in the 90s, the premise was that many Americans are going to be trained to administer Russia and China as like the next Germany and Japan, the next provinces of empire. And this was a reasonable guess at the time because Russia was part of the G8 and China was sending its best to America.

1:19:53And even these like, you know, outlying countries, it seemed like the entire world was under American empire. Right. Right. And, but then what happened was like all these things kind of came undone because China executed so well, right? And the internet executed so well. And they're both actually invisible to Americans. You know why? Because the internet is literally invisible. It's intangible. And China's overseas. So like the cognition of these things even existing, it's not like you can look around and see it happening, right? It's happening either overseas or in a cloud, right? Okay. So my narrative is that the rise of China, that basically disrupted the Republicans.

1:20:32The rise of the internet disrupted the Democrats. And with the rise of China disrupting, so let's take internet disrupting Democrats led to the tech clash against the internet, and it led to wokeness against the Republicans. China disrupting the Republicans led to trade war against China, and Trump against the Democrats. Okay. Like you can make a diagram of that, right? So that's like a more explanatory model to me of the last 10 or 15 years or so. Wait, explain the wokeness against the Republicans? With this - Because what's the power structure that, because the whole origin of wokeness is demolishing power structure.

1:21:06For me, it always felt like one of these emergent things, not necessarily intentional things. It's very intentional. This graph shows that starting in 2013, all these phrases like toxic masculinity - Yeah, I've seen this, yeah. Right? These all went vertical in NYT in 2013, right? Right. Contrast to phrases like Amazon. Right. These are like control phrases where you can see them just kind of going up organically on their own. Right. You know, or like, you know, radios going down. Right. These are like control phrases. But you can see an editorial decision was made because the New York Times stock price was down.

1:21:41Remember, like post-financial crisis, they almost got sold. Washington Post did get sold. Right. So their stock price was down and an editorial decision was made after seeing the success of Gawker and these other blogs to just pour the most inflammatory words and narratives possible into the water supply. Part of this was also the Obama reelection. In 2012, the economy was still weak and he couldn't really say that he'd repaired the economy. So that's when proto-wokeness really got underway. He pushed the race and gender buttons extremely hard during the campaign, and that got the whole thing heated up, right?

1:22:18And a third - The 2012 re-election. The 2012 re-election, right? So he pushed those buttons much harder in 2012 than he had in 2008, partly because he couldn't run fully on the economic record. A third piece of it was Occupy Wall Street was pushing on economics, and there are various central leftists who didn't want economics to be the focus. So it's like, okay, just go and do the race and gender and so on and stuff, right? So I'd say these three things, like the, let's call it the sort of cynical center left, the New York Times, and Obama. Of course, the roots of openness go even deeper. And there's all kinds of things going back to the 60s.

1:22:54And you can trace it back many, many, many decades. Of course, you can trace it back. But I'd say the immediate kind of thing is this editorial decision over here. And the key thing about it from my standpoint is, you know, that saying like go woke, go broke. But there's actually an alternative phrasing, and this is, I think, John Stokes is calling it to others. Go broke, go woke. Why? Gone broke, go woke. Because once these organizations were going - Were so, so, so financially - Do you think it was the organizations? Because it feels to me like just, again - There's a bottom of that aspect of it, too.

1:23:27Yeah, there's like this economic messiness that was happening that at that point, where do you go? Where do you blame? Because you've got a continuing presidency. Yeah. And so you start to recognize, again, maybe at the end of an empire, this idea that there's, well, you create synthetic power structures that rationalize the circumstances that you find yourself in without actually looking at the real circumstance, which is - It was so insane. We organized the system to suck up all the capital and inefficiently blow it everywhere. And that's what happened. The whole BLM thing after eight years of a black president, you know, it was something where it was just, it was essentially meant to be like, what's the right way of putting this?

1:24:10That was, that's something where the left, when it was under threat, was going back to its old, it was its own MAGA, right? Let me explain what you mean by that. Yeah. The civil rights movement. These were its glory days. Yeah. When we were, we fought for a cause. Yeah, man. That was their great moment, right? World War II, when they're fighting the Nazis, is also a moral cause. For the right, if it's always – I mean, you always identify an oppressor, the invisible but now manifest reality of the system that's broken, which is the reason we can't progress, right? Because I think we're wages stagnant around that time as well.

1:24:49Well, I mean, inflation has also been crushing wages for a long time. I mean, real wage growth. It really went the stagnation or the devaluation really got underway. That's the moment when socialism takes off, which is, yeah. I have a theory on this. My theory is like every human needs to progress by 10 % a year. We know what we don't have. Like that's what makes us unique. We have these like abstract concepts. There's things in the world that I see and I don't have it. And so my observation sets my understanding of what I am, what I have. so that's where desire comes from and so the human only feels satisfied and happy if they're getting the things they don't have by some amount every year have you ever seen this graph um amazing amazing amazing chart price of soup yeah here's why there's relatively few products which are like consistent over more than 100 years right because you know and the same manufacturers being in business yeah they're manufacturing of scale that tells you yeah Yeah.

1:25:51This is the true chart, maybe the single best chart of inflation. Yeah. Oh, look, we went off the gold standard. Yeah, exactly. So you can see it here, right? There it is. So this is the true devaluation of the dollar. No, but I said, so this is the underlying, right? So we made these decisions to grow the government, grow government spending in order to give people more stuff. As a result, the only way to keep doing that is get off the gold standard, fiat, print. And that's where we ended up causing stagnant wage growth, stagnant purchasing power, et cetera, or declining purchasing power, and stagnant wage growth.

1:26:21On the housing, education, and healthcare, those three areas, if you've seen the graph that shows, we can put it on screen, but those are three things which have soared in price. Correct. While everything that technology - No, I'm not correct. The technology, that doesn't have the government spending. Well, that's right, exactly. So the things that are - When the government spends, there's no market force. That's right. There's no choice to not buy something if it gets too expensive. So as a result, it naturally gets more expensive every year and the government just says, okay, I'll pay more, I'll pay more.

1:26:48Oh, we need bigger budget. We need bigger budget. Yes. Because the government cannot say no. They're not an actual willing buyer. They're an unwilling buyer that will pay anything at any price because they're mandated to buy the thing. That's right. But just to go back to the point that I think is really important. So as this happens, the cost of everything goes up. The purchasing power for everyone goes down. And I think what makes a human happy, there was a study in Jonathan Haidt's first book or one of his earlier books that he did called Happiness Hypothesis. where he showed a psychosocial survey data on happiness as a function of income.

1:27:22And like at the time, it improved up to$60 ,000 of income a year. Then it flatlined beyond that. And then the key measure of happiness was income change year over year. So the more your income changes from one year to the next, the happier you are. Right. And you can think about like you win the lottery, you're thrilled. That's the best year of your life. Next year, you didn't win the lottery. Even though you have$40 million in the bank, you're not as happy as you were the year you won the lottery. Right. So when your income changes, when you're purchasing power changes, when you now have more than you had last year, you're happy.

1:27:54If you have the same as you had last year, you start to get a little distressed. And if you have less than you had last year in purchasing power, you're unhappy. And that's when I think you create the construct in your mind of the system and you try and define the system that keeps us. And that's where there's this opening for the oppressor, repressed narrative to start to take hold. Absolutely. And I think my framing on that or my phrase is rather than like first world and third world, I talk about the ascending world and the descending world. Yeah. Right? So the Brooklyn woke is from the descending world.

1:28:27They were born rich, but they feel themselves becoming poor. No, and they were the first generation in American history to move out of a middle class house and then have negative capital. They end up in a rent situation with 40 million Americans graduated in the last 10 years from college with student loan. average student loan debt for$40 ,000. So 40 million Americans with$40 ,000. Is that right? Yeah. That might be a median number, but it's a pretty substantive number. And so 40 million, 4 million a year, 10 years. And so you add that number up and then you look at the cost of rent and then you look at wages in New York city and you're like, okay, rent has gone up, wages have stayed flat.

1:29:05And now you're graduating. And most of those kids came from a middle-class family where they had positive assets, the parents owned the house. Now the kids that voted for Mom Donnie cannot buy a home. They do not see a path to being able to do that. They're stuck with these student loans, and they don't know where they're going to go in life. That's right. And that's when the oppressor or press narrative resonates emotionally, and that's when this kind of socialist manifesto can win. That's right. And I think basically the issue with this is it is – You know, there's a graph that I think. Americans pull back from values.

1:29:41Right. Exactly. Religion, children, community. Only thing that's all this money, which is very individualist, right? Yeah. By the way, this is all linked to progress, like that 10 % improvement in life every year, as I mentioned. Like the more you can, because as soon as you don't have that, all the values that you held true, you no longer believe in. The rule got you here what use was the rule. That's right. Okay. So this graph has three different charts. This is showing the yield spikes in the US, Germany, Japan, UK, Italy, France at the same time. This is showing yield dropping in China. But this one is one which shows that the blue American and red American are genuinely descending world, but they're not calibrated on why.

1:30:24Essentially, for thousands of years, the center, can you see that from there? Okay. For thousands of years, the center of the global economy in the sense of the weighted average, right? So not literally in Kazakhstan, but like the weighted average of China plus India plus the Middle East, Europe, the weighted average was basically in the center of Eurasia because there was rough military economic parity across the Eurasian supercontinent. Okay. That's why Marco Polo sought out China. That's why Columbus risked his life to get to India. That's why the Mongols and the Huns at various times could defeat Europeans.

1:30:55That's why, you know, like the, you know, Spain was taken by, you know, folks in the Middle East and so on and so forth, right? And so this is something where it wasn't that Europe was completely dominant. They were one major power and they weren't unified at all times, obviously, right? Okay. So with the advent of the Industrial Revolution, Europeans got so far ahead that the world economy rocketed out there. And then with 1913, 1940, they blew each other up with World War I and World War II with all these new gizmos they had. And when the dust settled, everybody else had been – they were under socialism.

1:31:30They were under communism. Japan had been nuked. Eastern Europe was in ruins. The entire European continent was just bombshells, everything flying, right? And the US was basically unscathed relatively. And so the world economy was essentially balanced between North America and Western Europe, right? Right. And so this was peak America, peak Westernization, peak centralization of all time and all of history. Right. But this is seen as, by Americans, the way things are supposed to be. That's why it's the post-war order. This is treated as the year zero, 1945, right? The beginning of American empire, whatever you want to call it, right?

1:32:07And so everything is calibrated on that as the baseline, as how things were supposed to be. And people say, oh, around that time, somebody without a high school degree, they could have a home and they could have a wife and kids. And that was a good thing for the working man. What they're not calibrated on is that the Chinese guy or the Polish guy who is just as smart or smarter or harder working was artificially being restricted from the global market by communism, by various ideologies, right? Once the Cold War ended in 1991, you see the rubber bands snap back to Asia very, very fast because China is no longer a communist.

1:32:48Eastern Europe is no longer a communist. India is no longer a socialist. It's liberalized. Russia is no longer a communist, not to the same extent. Southeast Asia is liberalized, et cetera, et cetera, et cetera. Everybody is now actually competing on the global stage. And for a while, this seems to be a win-win for everybody. And in many ways, it is. But the problem is that this is a huge shift in relative power. And here's where the problem starts. Dollar inflation is global taxation because when the US is printing a dollar, it is distributing that inflation across billions of people, not just 300 million Americans.

1:33:21To have the dollar, they need to be global number one. If they're declining in relative power, they're no longer global number one. Whereas if America was just exporting chocolates or even cars, it could have a gradual decline to number two. Instead, it has to fight like heck to be number one. And this is actually the underlying logic of, you know, like any company, if you're not growing, you're dying. Right? So the American empire has to, from like kind of the meta logic, you know, an ant doesn't have intelligence, but an ant colony does. Right? The empire has to start a fight with Russia, start a fight with China.

1:33:59That's right. It has to expand. If it doesn't expand, okay, fine. But the problem is, and getting back to the city strap, it has lost that fight with Russia in the sense of all of NATO cannot impose military terms on Russia. Just the fact that Russia has fought this thing to a standstill, maybe with the Purgosian thing, it could have gone another way. But the fact that Russia is being essentially supported by China, Russia is just going to grind this out and Russia needs it more. So it's very clear, I think, what the long-term outcome is, even if it hasn't been priced in. Moreover, to the Sydney strap, arguably Russia-Ukraine was the big China-US war, but by proxy.

1:34:37And so it's done by proxy where China supplies one side, the US supplies the other side, and they slug it out, and the Russians are basically winning. Otherwise, there wouldn't be peace talks. There would just be dictating terms. There's only talks if you can't dictate terms. The US is not strong enough to dictate terms to Russia on the battlefield, or strong enough to dictate terms to China industrially. And so the issue here is that that means you have a descending world, like the blue American, red American, who are calibrated on being all-time high, your lottery winning kind of thing, right?

1:35:07They're calibrated on 1950, but you can only go down from there. Right. And so because of that, that's like this, you know, we start to understand the perspective of the Russian after the end of the Cold War. right right they just felt this huge psychic loss in status and many of them discovered new identities this is the biggest thing by the way um the soviets some of them became some of them were estonians they had a new identity estonian nationalism right some of them like sergey brin's uh you know parents or vitalik's parents they went overseas they identified as mathematicians first and foremost not like russians or what have you right some of them obviously stayed in russia um some of them became like you know they were ukrainian some identified as christian orthodox Christian.

1:35:50They rebuilt the church. Many just had a total identity crisis because they were atheists and they didn't have any meaning. And so on and so forth, so they drank and drugged themselves. And there are all kinds of crazy wars after the Soviet Union ended. And so that question is what's being litigated right now today on X at ever increasing volume of who is an American is like, who is a Soviet? It's like a constructed softer category. And it's even more artificial than the Soviet category. Because Soviets, you could at least come back to Russian. And Russians were 50. That's in our piece. You know the ethnic piece at the end of the Soviet Union?

1:36:22No. So we know the economic piece, right? Obviously, communism didn't work. And eventually, the planned economy failed. All true. But the ethnic piece is that in 1989, there's a survey that showed that the Russian ethnic group had gone down to 51%. And so the Russians were like, wait a second, we're supposed to be predominant in the Soviet Union. And long pent-up nationalisms were fighting with each other because, you know, like the Poles or the Estonians, they all felt legitimately oppressed by the Russians. But the Russians felt we're carrying the weight of the whole union. We're the main guys.

1:36:52We're the ones who bled the most, you know, and we're paying for the union. So both parties felt oppressed by the other. Yeltsin was on the side of Russian nationalism, Estonians on the side of Estonian nationalism. Poles, you know, like everybody was in for their own tribal nationalism. The whole thing came apart. This is what's happening in America now, where double digit percentages of the population, some percentage of people hate white people, Some hate men. Some are mad at Jewish people. Some are mad at Indians. Some are mad at X, Y. No matter what, somebody hates you in America, unfortunately.

1:37:20And so when you add all that up, that is very similar to where the Soviet Union was before the very end. And the one thing that's keeping the whole thing together is the reserve currency. Yes. But that's going away very fast. You've seen the dollar graphs and so on. So because of all that, I think be ready for the reboot. Like, I think what's going to happen after the dollar ends is the Democrats are going to side with Chinese communists and the Republicans are going to become Bitcoin maximalists. And that's why I think it comes next. But I think one other piece I'll say, a very big thing that is going to become a thing in the future is people are going to be mad at those who leave.

1:38:00They're going to say something like, stay and fight, you coward. right and uh but the issue with this is you know i'll give a one-liner response and more because cal canis and i jason and i have kind of talked about this i'm like did the irish americans betray ireland by leaving ireland should they have stayed in ireland there's actually more people of irish descent outside ireland right they didn't really betray ireland what would that even mean the potato famine other things things were breaking down obviously some irish stayed back why didn't they stay back right and the actual answer was those people at that place in that time did not feel that they actually were empowered to cause anything positive politically there.

1:38:34So they left. The Puritans who came to the Massachusetts Bay Colony, they left, right? Because they felt, you know what, let me make a better life abroad, right? The Germans who came from the revolutions of 1848, they felt better life abroad. And then more recently, obviously, Jews coming from the Holocaust, you have the Persians who fled the, you know, Iranian revolution. Yeah. Chinese and Koreans and Vietnamese who fled communism. Indians were really oppressed by socialism and Indira Gandhi and emergency and so on and so forth. These are stories that Americans don't necessarily know. And obviously, there are all the dysfunctional governments in Latin America and South America, like Castro.

1:39:10And that's a story that many Americans do know. Venezuela. That's right, Venezuela. So the point being, these people, like Russians, Chinese, they're not dumb people. Like, look at – they're pretty good at math and they've got a great civilization at various times in history. But they were hit by this Mayan virus of communism. Their society is melted down and many of their best left. And many others were stuck. And the ones who were stuck were mad at those who left. But stay and fight, what exactly does it mean? Because stay and fight who? Oh, stay and fight another American for America? That's what they mean by it.

1:39:41Stay and fight with whom? Because a lot of them are also saying, tech guy, get out. They're saying, you know, like, Indians, we don't want you anymore or whatever, right? So we don't want you. Yeah, tech guy, if you over-contribute, I'm going to penalize you. Yeah, exactly. That's right. So on the one hand, they'll be mad for you for leaving. The other hand, they're literally putting up things saying, tech guy, get out, right? Then stay and fight for what, right? Because it's just something where they're mad about the past going away, but they don't actually have a positive vision of the future where you're on equal terms with them and so on and so forth.

1:40:13And finally, stay and fight how? Yeah. Well, because staying actually is surrendering. Why? Because if you stay in California, you're subsidizing it, right? Yeah, yeah. And so leaving is actually fighting, right? So anyway, so that's how I think about it. Getting these zones going, getting these Freedom Cities going, getting these specialty lawn zones going, I think that's a positive vision we want to work on. Yeah. Well, I'm sure people in the administration will listen and try. Great. I do think it's important to try. And I do think like, look, I mean, America was designed to have mechanisms of self-correction.

1:40:48I think we've talked a lot about the grand cycles and all of those mechanisms are another effort at a cycle that we've seen many times before. But I do think that there's a significant will. And I do believe deeply in the notion of agency, but it requires collective agency. And there's collective forces that have very disparate views on what their agency is intending to do. And that may ultimately lead to not being able to get out of the cycle fundamentally. I will say this. There's a lot of amazing Americans. There's a lot of amazing strength in the American spirit. And a big part of that is being able to reboot from scratch.

1:41:32The whole thing, what was America? It was the startup country. The whole thing was about being able to do it from scratch, right? Being able to reboot from scratch. I just don't know if the majority of Americans feel that or remember that. Maybe so, but at least some do. And those can found freedom cities and special economic zones and startup cities. And crucially, that's often portrayed as, oh my God, it's for the rich. It's not for the rich. It's actually something where it's for the builders. That's right. Right. Okay. Great. Thanks for having me. It's been great to visit. Boom. And congrats on everything you've built.