Uncapped #24 | Balaji Srinivasan

24:17That's like the real chart. Right. Right. So the problem is the nominal chart is up, but the real chart is way down like this. And you have to actually look at the real number, right, which is the devaluation of dollars already there. Anyway, point is several things are happening at the same time. So first is by tariffing all these countries, they're giving an unmistakable signal to the whole world. See, normally when there's some economic issue, it's very hazey as to what caused it. Like, why are your healthcare premium size? Someone could blame a bomb a care, maybe the nod. It's like hard to tease out this multifactorial.

24:47But for 190 countries, they all got a tweet on the same day at the same time telling them that the reason that they're most pro -American companies in each country were going out of business or radically impaired is because these tariffs were imposed. And by the way, just to explain that point, any company in Vietnam, in Thailand, in Hungary, whatever, right? Morocco, that's like exporting to the US. The guys who are doing that are the most pro -American people in that country. They speak English, they have American partners on that side, they have vendors, suppliers, they probably studied America or they're people there, they are the people who normally are lobbying their country to maintain good relations and good trade relations with America.

25:28Every single guy like that just got completely wrecked in every country around the world simultaneously. When I mean wrecked, I mean like bankrupted, certainly humiliated. Anybody who invest in America, trusted America just got rocks. And what does that do? That means the faction in every country that said, hey, we should trade with China instead got radically strengthened as a consequence. For example, in Taiwan, there's a guy in Taiwan called Jim Boss. He's like the Joe Rogan of Taiwan. He used to be super pro independence. Now, he wants Chinese reunification. Taiwan, he's influencers are completely flipped because they saw essentially the US kind of, some people say they have asked it on Ukraine.

26:09Some should say, they should never got a war on Ukraine. Some will say they should never pulled out. Fine, whatever it is, the US is not winning the war in Ukraine. And Taiwan doesn't become, become like Ukraine, like a crumpled up tin can to use against China. And they don't think the US will back them number one. And number two is China is actually pretty nice right now for many of them. And China's also doing something called, the issue is something called the Taiwan compatriots card. Do you know what that is? No. Basically, they want to do a peaceful reunification with Taiwan. So every Taiwanese citizen can get a card that basically makes them a de facto Chinese citizen.

26:40So they're on because what does it mean to make someone to reunify the island? It means they're all Chinese citizens. So what if you could get 50, 60, 70 % of them? Because there's huge advantages if you're a Taiwanese person to do business on the mainland, which is like 30 times bigger, right? Or something like that. So it's a much bigger economy. You can live there. You can travel back and forth. What's not to like? So for the apolitical person, it's like you're living in Hawaii. why wouldn't you want to travel to the US mainland, right? So the Taiwan compatriots card is this controversial issue within Taiwan, but it's so useful to the Taiwanese people.

27:12The China's all China, I remember they speak, they speak Chinese, right? They understand Taiwan. They're doing a lot more than simply just like invading dial. They have like five million spies in there. You know, all kinds of stuff is happening there. So TLDR, the economic world war that the trade war is on the world, just like the books, remember the books ostensibly were for brown people and they're for Jewish people and black people and women and gay people and blah, blah, this, that and the others. They were supposedly for everybody. But in practice, intersectionality turned everybody into an oppressor.

27:45You know why? Well, I have a, well, I agree with you. Let's say, let's say you're Jewish, but you're also a white man and you're rich. So therefore you're an oppressor on that axis, right? And this guy, he might be Indian, but he's rich and he's, you know, a man, so he's a presser on that axis, right? So they could just selectively emphasize you're basically whatever your most impressive attribute is. Exactly. And everybody. So for example, white women were victims during me too. And two years later, they were the oppressors during Karen as Karen's. So 2018, they're the victims in me too when it was useful.

28:19Then 2020, they're the oppressors as Karen. The same woman is not treated sympathetically. So, and you know, the point is that they will just take your oppressor axis and stress that, and the thing is everybody is either when you do an OR function, you know, like, or like, either the probabilistic or the computer science version, you do the set theoretical OR, for example. Everybody's either white or male or straight or cis or successful or or like when you do the OR function that's like everybody's an oppressor. Ninety -nine point nine percent of the world is an oppressor unless you've got every single intersectional bingo.

28:58Okay. So this is similar to what the Soviet Union did where promised the workers paradise but actually delivered the gulag. Right. The difference is communism promised the working class, better economics and delivered them worse economics. Wolkness promises the wakist class higher status. Like now everyone will respect you, right? And it actually, once they buy into the premises of oak, they can be canceled at any time because they're also an oppressor on all these other axes that they're not thinking about at that moment. By buying into oakness, it's a devil's bargain. We're in the short run, they can yell at you that you're mansplaining.

29:35But then three months later, that white woman is checked from the side. She's got white privilege. Oh, boom, you're knocked out in the box. Okay. So intersectionality turns us all into oppressors. And so what won't instead is it created the global anti -wok coalition. Wonderful. Great. Okay. The problem is what Mac has done, unfortunately, is they've created the global post -American coalition. This is what people are calling outside the US world minus one. Everybody wants to trade the US. You said we want to trade it, everybody. So what are they going to do? Well, they're not going to wage trade war with each other.

30:06They're just going to do world minus one. And so they're redirecting trade flows. And what people are not seeing is China went. And like all of these guys, it was just the most amazing, crazy thing. Okay. Actually, both China and India have done this. I'm happier that India has done this. But right after Trump announced his trade war, all of these guys who were on the fence like, you know, in Southeast Asia and so on, they like started lighting up the towers in like Chinese colors and they did state dinners for G and they just started starting. China's went and ran the table on all these like swing states because they just got told FU by the U .S.

30:41who said they don't need them, right? And then, obviously, India got pushed into the bricks column in part more into the bricks column by this trade war. And so they did deals with Europe, and they did deals with China, they did deals with Russia, they did deals with all the country other than the US, India's just signed deals with their done, gone on stage with, right? So world minus one is a very bad place for the US to be because so that's like diplomatic isolation, okay? We talked about the economics, right? The dollar, we talked about diplomatic. Go ahead, you're going to say something. I just wanted to round out sort of this political map with like you started with kind of, you know, there's like these two twin battles, you know, there's like sort of like, let's say like woke sort of media, academia, just like state stuff in tech.

31:26And then you've kind of got like China and the right. And then I guess what I'm curious about is the other sort of like the cross angles. And basically what I'm trying to get to is like, what are the natural alliances or unholy alliances maybe that are going to form? And so like, you know, it's like, obviously, it's not like, it's not like media and academia love the right. And it's not like China and tech are actually sort of like simpatico. Exactly. It's a four way clash. You put out a good treat about how like China, you know, is sort of like state above capital and tech is naturally capital, but state like they're, yeah, what are the other directions here?

32:03other directions. Excellent question. So my view is the successors to American Empire are China and the internet. In the same way that the successors to Europe were American cat like Europe was the center of the world in the 1900s. Yeah. You know, like the UK and France and Germany and the barbarians were the Americans and Russians on either side. And then it invalidated and collapsed. And then basically got split down the middle between American capitalism and Russian communism. Are you saying those are the would be successors or you're thinking that that will actually happen? It's already happened.

32:35It just hasn't been priced in. Like media, for example, already NYT and so on get much less engagement than social media, right? Like the SEC, Gensler and so on has been beaten. Crypto is by some measures to number four, sock exchange globally, but it's very quickly becoming like hyper liquid alone. Just more revenue than NASDAQ would like 11 people, right? Internet capital markets are here. the internet has already taken over media and money and China has already taken over manufacturing and military. That just hasn't been like priced in by everybody. What are things that's happening potentially?

33:07Is this new national defense strategy is coming out, which is supposedly, we'll see what actually happens, but it's reportedly going to have the US essentially pulling back from Asia to focus on the Western hemisphere and the issues at home. That is essentially the look, Like Higgseth and these guys are actually, they're not dumb people. You know, if you see Higgseth on podcasts before on the Sean Ryan podcast, he said Chinese hypersonics can sink every US aircraft carrier. And if 15 hypersonic missiles can take out our 10 aircraft carriers in the first 20 minutes of a conflict, what was that?

33:38You saw actually the previous Secretary of the Navy, Carlos Del Toro admitted one Chinese shipyard can generate more ships than the entire US Navy combined. The CEO of Raytheon said you can't decouple from China because it's like too important to the US economy. The relationship with China, we have to find a way to get along. There is a co -dependency. There's graph after graph, chart, I mean, the US military is made in China. There's studied by Gavini, which is a US military Pentagon commission study, $400 million, and it shows like the Tomahawk and J -Dam, their supplier supplier in China. That's already happened.

34:07The internet in China are already the successors. So what's going to happen? In my view, we're going to see the third configuration. You asked about an unholy alliance. So we saw in the 2010s, blue and tech, blue sort of force tech, but there are some guys in tech who are sympathetic to blue as well. Blue and tech against red to like censor de platform purge and so on and so forth. Then in 2020s, we've just seen red and tech against blue where the libertarians in tech sided with the conservatives and that's Elon and X and Sacks and so forth. But we're going to see the third configuration, which is blue and red against tech.

34:44Because the blues hate the capitalist and the reds hate the immigrants and by the way, a lot of the center now hates the phones and they're blaming with some justification. I'll get to this. The internet for everything that's bad. What they're remembering is we had a good life 30 years ago. The 90s were good. We didn't have all this internet. We didn't have social media polluting our people. Yeah, this internet thing ruined everything. They are taking that correlation to calling it causation. And there is some truth to that. But I think the important counterfactual is that for billions of people on the other side of the world, the internet resulted in the greatest and highest standard of living they've ever had.

35:25Like in India, the internet has radically increased, you know, the, the incomes and so on and so forth. Southeast Asia, in Dubai, in Riyadh, in China, certainly for billions of people, you know, actually in Russia, Eastern Europe, right? So Eastern Europe, Russia, India, China, to some extent, Brazil, you know, Dubai, Riyadh, Southeast Asia, the internet is good on balance. And the reason for that, crucially, is they're okay with a moderated internet. When you say blue and red verse tech, you really mean tech verse, everybody else. There's a great book by a woman named Amy Chua. She's actually the tiger mother, okay?

36:01It's called World on Fire is written in 2003, way before the current time. And she points out that there's something called a market dominant minority. That's when there's a, when you have capitalism and democracy together, but there's a small group identifiable that wins very publicly in the market. Then the group that wins the election starts to hate the group that wins in the market. Those are, for example, the Jews in Germany, whites in South Africa, Indians in Uganda. Okay. Overseas Chinese in Southeast Asia. These are people who are visible. and we're winning in the market. And there's angry sentiment on their side.

36:39And she points out there's a review by Yale review of books, I think, that talks about this. And it says that the backlash takes three forms. Okay. First is a backlash by the majority against the wealth of the market, I'm already using the democratic process. Then there's a backlash of the market, I'm an already against that initial thing, essentially with forces sympathetic to the market, I'm not pushing back. Finally, there's a third reaction where the frustrated a majority that can't win either in elections or in the market just starts to get really insanely violent, perhaps genocide. Okay.

37:12Now all of her examples involve a race. Okay. Nothing to group. However, most of the violence in the 20th century was actually not on the base of race. You notice on the base of, see, it's funny. I put that as a blank, but it's always interesting to me that I'm not saying this is an attack or the many educated people cannot answer that question, but I just posed. What most of the down to the 20th century was based on his class. Communism was class warfare and kool -ox were liquidated as class. In Cambodia, the guys with glasses were just liquidated as a class. In China, the landowners, anybody who's considered rich, the kool -ox had two cows.

37:52So he was like a super rich peasant. So Lenin's hang order, hang the kool -ox, kill the rich man, rich by some very modest definition of rich. Okay. The enterprising small business man was hung, quadrard, murdered. Okay. Envy is a very powerful force. If I had to have answered, I guess I would have, I guess incorrectly answered something like, like sort of like a political philosophy or something. That is more balanced. What happens is the guys who are being attacked build a political coalition to try and get to 50 -50 the other way, right? But it's an actual massacre. then it's like when they're totally outnumbered.

38:30Okay, so the issue is tech isn't a race, but you know what tech is? Hmm, tech is a class. It is also kind of a political philosophy in some ways. It's kind of a political philosophy. To like, to the clip you posted on X, which I want to, I'll link to because I think it was really good sort of highlighting. Like when I watched that, it sort of highlighted something about like the America trying to think that I don't think I had fully internalized. But I do also think that like tech does stand for like capitalism and some people kind of hate that. Yes, oh, absolutely. Well, that's the thing. Well, you got it.

38:59Last century, what was a lot of the yelling about? Capitalists. This century, what's the law, the law, the law, and going to be about? Technologists. But we're about techno capitalism. Last century, the capitalism was front -page. The technology was kind of a little bit in the background. Here, it's the technology that's front -page in the capitalism that's a little bit in the background. You think people are not about the technology more than about like the accrued wealth and power? Yes, because they're blaming AI for making everything fake and they're blaming social media for radicalizing people.

39:26The blues blame it for radicalizing people to the right, the red's blame for radicalizing people to the left. Probably blame crypto for like de legitimizing like governments or something. Once, yeah, once Bitcoin wins, once Bitcoin hits a million bucks and like governments need to actually have Bitcoin to survive, which is going to happen, a lot of people are going to be very mad at Bitcoin, very mad, right? Because it basically all kinds of welfare, all kinds of redistribution, stuff that would, The issue is what would have happened in the absence of Bitcoin is everybody would be diluted and gone to zero.

39:59In the presence of Bitcoin, some fraction of people can get to lifeboats, can get to parachutes. That's what Bitcoin is. It's a lifeboat. It didn't crash the plane. The money printing was happening beforehand, but it did allow some people to get away. The fact that some people are getting away, their relative wealth will be bit up like with the next 10X of Bitcoin, all the up billionaires get diluted down. Every USD holder gets I looted down and somewhere between $100 ,000 a million per Bitcoin wealth becomes cryptocurrency. That's say most billionaires become crypto most fortunes become crypto.

40:31The fiat world gets diluted down. It's a very deep point Right one more doubling of gold for example gold is at 21 % of global reserves Dollars at like 42 so even like another 50 % increase to start starting from 3 and 50 to 100 percent gold will flip USD So gold and digital gold gold is flipping USD as a reserve currency of states and Bitcoin is flipping as reserve currency on the network to pull it back. People are going to be mad at the tech guys. Why? Because they're going to blame AI for taking all the jobs and crypto for taking all the money and tech guys will take all the blame. Plus guess what?

41:04Where Jewish and Indian gay immigrant right to the right. But to the left were white male capitalist. list. Okay. Can't win. Cannot win. So how's it go then? Here's what I would say. Every American ethnic group, other than African Americans and Native Americans left behind war, conflict, ethnic cleansing, murders, etc. in their home country to go far away. For example, the pilgrims, right, they left like a huge thing of America was leaving the wars of Europe. Right. They were immigrants. It's not just an immigrant, it's an nation of immigrants, EMI, GRE, right? The round heads in the Cavaliers left at various points, different size, English, civil war, Germans, left left the revolutions of 1848.

41:56The Irish left the Irish potato family. You might know that story, but there's more Irish abroad than there are Irish at home. Did they betray Ireland by becoming Irish Americans? Did they cut and run? Were they unpatriotic tax evaders by leaving Ireland when Ireland was chaotic? and they didn't, you know, they had the first mover advantage. They understood that their home country had nothing for them in any reasonable time frame under their circumstances. So they did actually something that was bold and courageous and they picked up and moved. They made a move, bold move, right? Why are there so many smart Iranians, Persians in America because of the Iranian revolution?

42:29Why are there so many smart Chinese people, so many smart Koreans, so many smart Vietnamese, because of the communist revolutions in those countries? Why are there so many smart Indians? Because India was socialist and, you know, Indira Gandhi declared most people don't know this. Indira Gandhi declared emergency in the 70s and like there's a lot of persecution of various kinds of Indians of different groups. So a lot of them left. Right. And they were getting crushed under socialism. So they got out. Why is he law into the US? Well, it wasn't a great place to be white in South Africa, you know, in many ways.

42:55Yeah. How why are there so many Russians after the end of the Soviet Union? Right. So all of these countries experienced meltdowns and the smartest and most resourceful in the boldest and the ones who made a move came to America. And that goes all the way back to the 1600s and 1700s. Don't you feel like then we still have all that talent. They're still building companies in America. And so America should still endure. They're not building companies in America. They're building companies on the internet. And this is the key thing. If you look at the S &P, it's the S &P 493 and the Magnificent 7.

43:28You've seen that before, right? That graph. So all the capital is going towards either internet companies or the other big categories. What? Digital asset at Treasury companies. So that means everything in the physical U .S. economy is being liquidated and put into internet companies and internet currencies. Think about it like this. Many people identified the internet America, but what if you asked, are they distinct? What is America minus the internet? It's not prosperous. The only thing people can point to when they say America, right, is the internet. Technology generally, maybe I would say.

43:59Technology, yeah, but that is the internet. Like the internet is, like it's a more precise we have talking about it because, for example, in San Francisco, San Francisco tech, do they make their money from selling sourdough pretzels or like ice cream cones on the golden gate bridge? They make money at Candlestick Park? No, or whatever it is, three -com park now, is an Oracle Park, whatever it is. They don't make money from the city of San Francisco. They make money from Morocco and Mexico and Malaysia. There's credit card swipes happening all over the world. And those flows of funds are coming into companies in San Francisco.

44:37And those are paying the taxes that are then enabling all of the crazy homo -satics to smash your windows and, you know, do drugs and so on and so forth, right? So that is nothing really to do with the city of San Francisco. You're not mining silicon out of the hills of Silicon Valley. No, just people who happen to live there. They just happen to live there for now, right? right? And in my view, it is a, it's a terrible strategic error to be saying you're doing AI and saying it's going to disrupt all these jobs and so on, especially blue jobs. Because going after blue jobs, right? It's going after doctors, lawyers, journalists, artists, bureaucrats, teachers, professors, the blue base, which already feels imperiled and is already radicalized and crazy and mad.

45:22Right. It's going to increase the more they feel on their heels. Yes. And look, I actually think AI doesn't just take someone's job. It also lets you do any job. You can do a decent job as an artist. AI, you know, like the hype around job replacement I think is actually not really that true. Okay. Nevertheless, it's being presented as such. You're saying it's not that true. Like it's like the data's not actually showing that it's happening. No, because AI does it middle to middle not end to end. Yeah. Do you think it'll stay that way? Or do you think it will get end to end or time? It took a lot of effort to get self -driving to work end to end a lot of effort.

45:56Like 15 years or something. Yeah, exactly. It'll take a lot of time for each application and takes a lot of capital, you know, because polish, you know, as anybody knows, last 1 % is 99 % of the work or would have you, right? So, um, the point being, it's in my view, a major strategic error, to based in the blue city, in the blue state, in the union, to be identifiably rich, to have billions of dollars to say you're putting blue people out of work. And so just simply trust that like the country still exists and property rights still exist when the left thinks your white male capitalist and the right thinks your immigrant, you know, like Jewish Indians or whatever, right?

46:37And the center hates you because of the phones. That's just a bad place to be in my view, right, given being a suit of history. And by contrast, there's dozens of countries around the world that have digital nomad visas that actually wants you there. I have so much more on ask you about this, but I also, I know we only have four minutes and I really want to hear about the network school and network state. Okay. So look, you've known me for a while and I think, you know, we had a talk in 2019 or something like that before I left SF. And I think like those slides held up pretty, pretty well. I can't believe it.

47:08Yes, they did. They did. And you know, a lot of the stuff that you talked about that you're talking about now, you were saying then and a humongous amount of it Turned out to be right. And I think the reason for that is if you like, I'm kind of a student of history and sometimes like it's like billiard balls or things will kind of move in a certain way, you know, over time. And so I can't always get the individual wiggles and so on, right? But I can, I think I can get them. It's like a forced diagram. You kind of have the macro forces. I'm doing NS .com and network school and so on and so forth because I actually am a centrist, right?

47:43They say I believe in capitalism. So I grew the center right on that. But I believe in internationalism and I agree with the central left on that. I agree with the, you know, David Shore, for example, who's like a central leftist or Noah Smith, right? Like I feel they're pretty reasonable and I can get along with them. I agree with the, you know, capitalist who are, you know, like kind of queasy about the tariffs. And I understand why everybody wishes they could just get along. But I also recognize that in my view, the solution doesn't lie in America anymore than in 1989. The solution didn't lie within the Soviet Union.

48:14The Soviet Union was a big and powerful empire, but it just had to take some time to itself, wind out its empire, had all kinds of crazy infighting for a long time, and the solution was on the other side of the world. So what am I doing with Network School, Network State? I am trying to be as politically uninvolved as possible in the US, but I'm trying to do my best to kind of continue what I think of as the best of American values. a fair handshake, capitalism, but tolerant, right? Internationalness and capitalist, right? But also many smaller things like, don't start a fight with somebody online for no reason.

48:56Try to be as win -win as possible, pay it forward. All of these basic aspects of etiquette where don't post private messages. There's a hundred different moral goofs and gallons from the small things like don't litter, to the larger things like, you know, don't first strike, don't start a fight online, right? There's all of these kinds of moral premises that are the values that underpin the valuations that I want to, and I think I am rebuilding on the other side of the world, and this is the third kind of thing. And you inherently couldn't just try this on some little coastal plot of land in California.

49:34I think that is doing it on extreme hard mode. I know people are trying that. But it's not magic dirt right the US isn't magic dirt you know to take a right wing thing and like kind of reappropriate re re re re like there's no reason. That you have to do in the US it's a very expensive place. It doesn't want immigrants anymore. It's anti tech. A lot of structural forces you have to build on the right platform and I am the minority report for sure I'm the minority report. But I'm a constructive minority report because what I advocate for is people working together to build not just internet companies, not just internet currencies, but internet communities, where we know each other and can work together and we have women help win.

50:16And you can join as a member. And then when you decide to, you can also become a founder. And then we can build the network states of the internet. I think it's fascinating. And I just love the way that you break all this stuff down and it leads to these conclusions. And I've known you long enough and listened and do you long enough that I know that a huge number of your predictions that at the time sounds unbelievable over time, a surprising number play out. And so I listen carefully and I appreciate it. Thanks a bunch for making the time for this. This was awesome. Yeah, thanks again for doing that.

50:49Thank you, Jack.