David Friedberg on the Fractal Frontier

All right. Well, David, welcome to Mercy podcast. I think now we're at two of

podcast. I think now we're at two of four, maybe three of four because uh I do a actually I was actually on allin a while back.

>> That's right.

>> And uh Sax and I have been friends for a while and Sax sometimes quotes me and I sometimes code Sachs. Uh but think your is your first visit out to Singapore?

No, >> it was my first visit to Singapore.

>> What What are your reactions? What do

you think?

>> Um I mean what was someone told me a statistic that 4,000 family offices have been opened in like the last 10 years or so in Singapore.

>> Underestimate probably. Yes.

>> Right. Incredible. And so I've met with a number of folks from that community and then obviously there's a lot of business in the region that operates from here, capital in the region that

move through here. Uh beautiful city, wonderful people, amazing place. So

>> and it's it's very wellrun. It's near

thing and you know uh I don't if you saw my tweet on this maybe you have some thoughts on this. So uh you know London has already given up the crown to Dubai and I think Tokyo and Hong Kong the capital of capital in Apac is now

Singapore. And now maybe NYC is

Singapore. And now maybe NYC is succeeded by Miami. There's like a little Miami boomlet like a few years ago and now it's like that was like the that was like the GBT1.

>> Yeah.

>> You know before >> as aspirational Miami is Palm Beach. I

think everyone would aspire for Palm Beach but they might settle for Miami.

>> Sure. Sure. Sure. Yeah. You know you know the specific geography of it.

>> Yeah. I think Palm Beach is a lot like Connecticut. It's like where the hedge

Connecticut. It's like where the hedge funds actually set up versus >> New York.

There's there's another reason for me which is that Latin America with um now Malay is showing more energy than we thought right or rather Malay showed staying power you so he won in Argentina

right so with Malay Kelly you have essentially potentially a Latin American capitalist renaissance and a non-obvious thing that I didn't know you know Antonio Garcia Martinez right so he made

you know a post years ago that >> u that Miami is actually the Latin America or the Singapore of Latin America Because if you're doing a deal between like a Mexican guy and uh

someone from Paraguay or something like that, they will tend to do that deal in Miami because there's people there who speak Spanish. It was like a neutral

speak Spanish. It was like a neutral third party location. And because Miami is full of Cuban immigrants, it can't go too far communist, right?

>> But because full of Cuban immigrants, it also can't go too overboard on on the other side as well, right? So there's an interesting sort of centrist, muscular centrist, good aesthetics kind of thing

about Miami where if I was if if one was in the US, I think that's one of the two or three best places to be. The other

place might be Starbase, Texas. I don't

know your thoughts.

>> I I think Miami maybe has a little less of the aspirational element that you might find in other college communities.

It's got a lifestyle element that probably dominates the aspirational element has been my experience. So

people are just so happy to be there.

>> Yes.

>> And they're just so happy to live life.

That's the vibe. It's a little bit of a European vibe, but positive European vibe. But yes, I I understand. And

vibe. But yes, I I understand. And

Starbase obviously is the pioneering West, >> right?

>> Which I think is what's deeply lacking in the United States right now is more of those moments where you and I talked about this earlier, but you know, the

vision of Westworld. You get to go live in the West. You get to go live that pioneering life where it is an open landscape. Everything is a potential and

landscape. Everything is a potential and your actions control your outcomes. You

have absolute agency but also absolute accountability and responsibility that fundamentally has probably been driven out of the United States to large part at this point. There's a strong

push to try and bring it back and to regrow it and there's some great pockets of it thanks to Elon and others that have forced it to happen. There's some

decent governors that are trying to reenable it. But for the large part, I

reenable it. But for the large part, I think you know that moment of the renaissance is over. So I do think there's a big question of where is it next? That's one of the big takeaways I

next? That's one of the big takeaways I take from visiting your network school here today is kind of reimagining that that west that we've all I think had these dreams and fantasies about.

Wouldn't it be amazing to go to those empty towns?

>> Absolutely. And I think I think um the way I think about it is if you go far west enough you actually end up either in the far east which is China or in the cloud which is the internet and that's where I

think the two frontiers are now right.

So uh and moreover the internet frontier where is that I I call that the fractal frontier. So if you take Starbase and

frontier. So if you take Starbase and you take Network Tool and you take the pop-ups that are coming up all around the world and all the special economic zones, right, the fractal frontier if you sum up all the territory of all this

place is actually quite large, right? It

it may be many, you know, many square miles. I don't I mean there's actually

miles. I don't I mean there's actually something called the open zone map that we can put on screen. The open zone map shows hundreds and hundreds hundreds of special economic zones globally, right?

And um the the thing about that is uh you get a sense of how many countries want something like that, right? Um

here, let me pull it up.

>> Wow.

>> Right.

>> Why are there so many in the United States? Where is that? That's where I'd

States? Where is that? That's where I'd like to enter.

>> That's right. So these are like these kinds of uh like this is the office of joint economic development. These are

like various offices. They take an expansive view of what a zone is in this map, right? But certainly in Central

map, right? But certainly in Central Asia like China's like sused with them, right? where they have, you know, drone

right? where they have, you know, drone zones, manufacturing zones, this zone, that zone.

>> Sorry, who defines these?

>> Uh, there's a there's a group called the open zone, open zone map group, right?

>> But I think that you can um like when you have this perspective, if you take a list of all special economic zones, you take a list of all of the sort of ghost cities or startup cities, uh you take a

list of all of the abandoned houses in Japan, you take a list of all the actually the towns for sale in America.

Have you seen that? Yeah. Yeah. So you

take all of that, that's the fractal frontier. Yeah.

frontier. Yeah.

>> And the the tricky part is moving one person out at a time has been hard. If

you move a hundred >> and we can coordinate with the internet, then we can actually go and do that. So

I think we can just like Bitcoin the key was going decentralized.

>> Yeah.

>> And then we can do it.

>> Yeah. Yeah. Because I think everything else is the opposite.

>> Yes.

>> Like the uh the absence of that environment is unfortunately gravity well.

>> Yes.

um which is very difficult to escape from. Um,

from. Um, >> you know, it's funny you say >> when I say escape, I mean productivity, escape velocity, right? Escape velocity

drives productivity.

>> It's funny you say this because actually a lot of statesmen in America understood that the frontier was actually the main thing that was keeping America going.

Like Frederick Jackson's Turner's like frontier thesis that the closing of the frontier in 1890 was like this very important before and after moment. And

in fact before it closed there were guys who wrote something like you know it is because a frontier exists that even if someone's dissatisfied with their lot they can always be told go west and you know you've got empty land. It's like

having a domain name right and actually because the frontier closed that started trade unions and communism because it was like a steel cage match for the world. Everybody was boxed in. They

world. Everybody was boxed in. They

couldn't go and just do their own thing.

>> Yeah.

>> In 1991 with the internet the frontier reopened.

>> No I think that's possible. Um

unfortunately I think there's governing rules that exist that then you know we thought the open internet was that moment. uh we always talked about the

moment. uh we always talked about the open internet in you know the early days it was going to reinvent how governing

bodies have reach how they operate and I think it wasn't and and you're obviously the crypto person but I don't know if that promise in the natural evolution of the open internet and then what I would

say is probably much more of a controlled internet nowadays has really allowed that um >> it's well go ahead producers >> yeah no no I mean I think it's a

function of like the internet became more of a um a pipe than a place um and the place remained the traditional

governing structures.

>> So I so this is what I call like network versus state, right? And my view at least is the state has won in the east but the network is winning in the west.

>> Yeah.

>> Like that's say like the Chinese state is definitely dominant over the Chinese network. But I actually do think the

network. But I actually do think the American network is stronger than the American state. And the reason I say

American state. And the reason I say that is for example, >> politicians who are popular on social media can now go to the left and to the right of their respective parties.

Crypto defeated the forces that were trying to stop it. Uber and Airbnb >> albeit taking casualties like we know >> defeated got velocity.

>> That's right. Even and to be clear it's like you know Saving Private Ryan the opening scene, right? You you watch that movie and you know that the allies are going to win but they do take casualties, right? So I know that tech

casualties, right? So I know that tech is going to win and we took a casualty like Travis Galanic you know got uh you know attacked by by the Jouos in 2017.

Travis did nothing wrong. Travis a good man and actually he was just on all in I think recently a little while ago right?

>> Yeah he's come on a few times.

>> That's great. Yeah. Basically I think that whole thing was just something which was the media attacking you know essentially like a like a tribal enemy basically.

>> And um >> so but nevertheless Uber still won.

>> Right.

>> Right. like Uber would Uber might have been a trillion dollar company had Travis remained there. It's true, but ride sharing one. They couldn't stop that right?

>> Let me ask you this >> because I I think that part of what made Uber win is it it it was a better product. It was cheaper. It was faster.

product. It was cheaper. It was faster.

But there's the gravity wells. The

gravity well in this case would be a union, taxi medallions, the governing structure of New York.

>> Do you think Uber could be successful if it launched today given the governance we see in cities in the US today? and

how much perhaps more difficult they might make it today.

>> Well, look at Whimo, look at Tesla Robbo taxi, right? Like those are kind of

taxi, right? Like those are kind of comparable. Uber paved the way. I mean,

comparable. Uber paved the way. I mean,

don't you think that like things have gotten tougher to do business in these cities? It's gotten much more

cities? It's gotten much more controlled. It's become less open.

controlled. It's become less open.

>> It's both at the same time, right? Like

basically they are fighting harder. But

net net if you net it out and you ask at when the dust is settled like two years later, three years later, four years later, I expect the network to triumph over the state in the west and expect

the state like by contrast in China, Alibaba was genuinely like seized, right, by the government, right? Wings

clipped, tech defeated over there, right?

>> In in in the west though, Bitcoin beat like BTC was greater than NT, right?

Bitcoin was stronger. NT launched all these attacks and so on. And so I think the final sort of grudge match, you know, like a um the final four and like uh you know NCAA final four and what

have you, right? So as we go up the brackets, right? Like it's CCP versus

brackets, right? Like it's CCP versus BTC is like the China versus the internet is where it's going to be eventually, right? I I think what you're

eventually, right? I I think what you're seeing, which is true, is that these state governments are getting meaner and nastier. They're also getting dumber,

nastier. They're also getting dumber, right? Like for example, when they're

right? Like for example, when they're saying like millionaires and billionaires, it's like saying meters and kilometers, there's like a thousandx difference, right? It's like a small

difference, right? It's like a small thing, but there's there's so few of them who have any numerical acumen. And

because of that, they can they can do it on I mean, how >> it's like saying meters and kilometers when you're supposed to be talking about gallons and ounces. Yeah.

>> But that besides the point.

>> That's right. Like a billionaire's like a billionaire is completely different from a millionaire, right?

>> Talking about cronyism versus >> Yeah. Exactly. That's right. That's the

>> Yeah. Exactly. That's right. That's the

right enemy wrong enemy cut of things.

That's right. And in fact, actually another reframe on it >> is many of them are political billionaires. Did we talk about this?

billionaires. Did we talk about this?

It's like um take take the budget of San Francisco for example. Last I look is about 13, you know, 13 billion plus a year. So you take the supervisors plus

year. So you take the supervisors plus the mayor and you divide the budget into this. They're basically each allocating

this. They're basically each allocating a billion in cash per year per person.

Yes, >> they're political billionaires. Now the

uh the thing about this by the way they're actually much much much wealthier than a typical market billionaire because a market billionaire is 1 billion net worth over their entire life of which maybe they can liquidate

10 million 50 billion right but a political billionaire is allocating a billion in cash per year. So over 20 30 years they are like 10 to 100x the

allocation of capital >> the degree of influence.

>> Yeah that's right. So the political >> which ultimately could be the way you could measure the value of the capital is how much can you affect the things around you to realize the things you want. Exactly.

want. Exactly.

>> Which by the way is why I always talk about the state being an organism on its own competing with the other organisms the other organizations which are aggregates of people that self assembled

and said let's form an organization to do this thing. The state, local, state level, federal, whatever, national are their own organization that fundamentally have their own growth

state in a system just like biology where they are trying to consume and they are trying to get bigger and they because the individuals have the same objective that the individuals do in any other organization which is to maximize influence.

>> That's right. And actually on this point I think this is really like this was a deep insight for me at least. Uh the

state is their startup.

>> That's right. Right. like for all these you know nonprofits and I was you know this is a oneliner I'll probably tweet this uh nonprofit equals anti-profit equals communist there you can get there in two steps right so for all these the

nonprofits are really more like anarocomunists but they still like the communists get their funding from the state the difference is they're not all directly reporting to the state they're all just given money by the state and then they do all these crazy things like

the managed alcohol program that you you want to talk about that like this crazy kind of thing >> yeah I mean I talked about it on my show but you you and I were talking about it earlier that the uh city of San Francisco has a managed alcohol program

where they will give out beer and vodka to homeless alcoholics that they can come and get any time of the day 24 hours in hotel lobbies where they walk in, they are given either they can

choose a vodka or a beer, they get a shot, they get a beer. Once they've

consumed it, they can get another one and they can just keep doing that under the premise that they're more less likely to go to a hospital if they're under the observation of someone observing them get drunk rather than

running off and having uncontrolled alcohol, which at the end of the day, there are reports that they've given out 17 shots of vodka in a single night to a homeless person. And this is like a 5

homeless person. And this is like a 5 to10 million year program for the city of San Francisco. I pulled all the 490 forms for those nonprofits and tracked down where all the funding went. And

it's basically a network of NOS's or nonprofits in the city where people that work there are making, you know, pretty decent wages >> doing this as a business, which goes back to the point, this is another and

and it doesn't mean to be negative about all nonprofits, just to be clear, because I support some nonprofits that have good work. So, I don't like the label of the the nonprofit being bad,

but there are structures, organizations that have assembled that have identified a way to get capital and to then use that capital for their own benefit.

>> Totally. and go ahead.

>> Yeah. No, and I I think that's what we see like the way I think about systems are what are the organizations

the components of the system.

The system that that the system that arises from capital which is a a measure ultimately of influence and access to assets realizes all these different organizations. You can create a school,

organizations. You can create a school, you can create a state government, you can create an NGO. We can create a club.

We can also create a business, a nightclub, a restaurant or an international business. And so these

international business. And so these organizations are these assemblies that are basically competing in an environment to try and consume capital.

So at the end of the day, the state organizes itself such that it will always end up wanting to accumulate more capital because it's distributing itself where every individual in the system has a benefit if they can get access to that

uh distribution. That's right. So that's

uh distribution. That's right. So that's

why the state ultimately always becomes so big. I my measure is that in the

so big. I my measure is that in the United States today it's probably the case that half the population more than half the population are um earning the

majority of their income whether it's retirement income or earned income from a federal, state or local government or a government contractor or retirement

check or some other sort of benefit pension or insurance program that's supporting their their business. So when

you add that all up, it's the majority of Americans now. And that's when I think you cross the point of no return where at that point the state has now consumes everything. Um because everyone

consumes everything. Um because everyone has every incentive to not have it stop growing.

>> Um whereas before you have natural market forces with these other organizations that are competing and they're saying, "Wait, that's not fair that the state has this, you know, outsized influence, but once it crosses that threshold,

>> you're absolutely right, by the way, that there are some good nonprofits.

It's a little bit like people can understand for example that there are good priests but there's also like evil priests that will use the good reputation of priests to do evil right

and you know one of the things that has certainly happened in the US I I don't know even what fraction of nonprofits are good versus evil but I do think that in San Francisco the homeless industrial

complex budgets are up and to the right you know in 2020 passed like 1.1 billion a year cash as a homeless population goes Crazy.

>> Is that crazy?

>> No. The whole thing is just It's so obvious the more money >> you distribute through this network, the the more the homeless population will swell.

>> Exactly.

>> And the less you're going to solve.

There's no natural market force to solve the problem in that sense.

>> That's right.

>> It's so these guys are the feed the pigeon society in a sense. I call them because all look at all these pigeons.

We need to feed more pigeons, right? But

really, it's even worse than that because they're Democrat drug dealers.

Let me explain. They are securing the real estate, the quote safe injection sites. They're handling the supply

sites. They're handling the supply chain, which is handing out the syringes. They're doing all the legal

syringes. They're doing all the legal work with the various legal clinics.

They're basically doing they're putting up the billboards, which are like the no overdose billboards that say snort or smoke crack. Literally billboards that

smoke crack. Literally billboards that say to snort, smoke crack. We can put that put that on screen. Um rather than to uh they literally tell people to do drugs, right? And they do all this with

drugs, right? And they do all this with the attitude that you mentioned with the managed alcohol program, which is like a faux wise, oh, boys will be boys. you

don't understand. We can't just tell them to have no alcohol. We need to they're going to do it regardless of us.

So, let's enable it and do it in a safe and amount of this is like the handing out of Narcan or whatever. Right. And

so, what what's really happening is they are McKenzie for MS-13.

>> Yeah.

>> Right. They are doing everything other than putting the needle in the addict's arm, though. They're putting the needle

arm, though. They're putting the needle right there and they're shooting away the police and they're letting the drug dealers in and they're removing the legal consequences for it. They're just

setting up all the propitious conditions for massive drug abuse. And their

business model innovation is to not take a cut of the fentinel transaction, which is like 10 bucks or something like that.

But to take a cut of the billions for fentinel prevention, because what happens is some homeless addict and really there more addicts and mentally ill than homeless per se. To not have a home is not the same as to be mentally

ill or a drug addict and being fed with drugs by these Democrat drug dealers.

And then what happens is and because these addicts are the victims of the nonprofits. That's the key thing.

nonprofits. That's the key thing.

They're abusing them. It's like munchin house syndom by proxy, right? So the

addicts go and they're driven out of their minds by these drugs and they go and smash and attack something. And then

what happens? The victim of that then says the victim of the victim basically says, "Okay, I need to vote to solve the homeless problem." And in this moment

homeless problem." And in this moment they vote to allocate more budget to the Democrat drug dealers that are causing the homeless problem.

>> Well, this is my point. So, so the the mechanism is that the state the individuals in the state which are the politicians or the state administrators who by the way I don't think necessarily

are all or necessarily you know malended. I think in their mind they think the only tool I have because I've only ever had it is a hammer and

that is the state. So in every and by the way for from my perspective I would trace this back to the New Deal in the United States.

>> Sure. Sure. Absolutely. Which I think was the turning point for the United States which I think we should talk about. But um so so there they raised

about. But um so so there they raised their hand and they say more not less more. This is also why I think you reach

more. This is also why I think you reach a moment where socialism becomes runaway in the United States which is we're at that moment now >> because if socialism doesn't work in New York as mom Donnie has promised the

answer won't be socialism doesn't work.

The answer is we didn't do enough more.

>> Yes. And so in the same sense the state representative whether it's the politician or the administrator raises their hand and says more give me more money to solve the homeless problem and that feeds the beast. So now that organization is bigger. It's consuming

more capital and it continues to go in that vein. And then the problem gets

that vein. And then the problem gets bigger. And I think the same thing has

bigger. And I think the same thing has happened with the cost of housing, the cost of education and the cost of healthcare in the United States because we made a promise. The state

administrator or the state politician has said since the New Deal, we've developed a a repeated kind of statement in this country in the United States

that we can do more to give you more Mr. for citizenry and the citizenry because of a democracy and this is the natural state of the system and how it evolves says great that is the answer for my

problem you you do more so I will give you more so we set up a federal home loan program we set up a federal student loan program and we set up Medicare

Medicaid to support healthcare as each one of those were set up the federal government takes money and funnels it into those programs and as a result there's no market check so in the case

of education the colleges can charge more every year and the student is free to just get more loans and every year the loans go up. So the college administrator rationalizes I can make more money by becoming a manager instead

of remaining an individual contributor.

My salary will go from 130 to 200 if I become a manager and hire four people.

Fast forward 30 years, 10% of staff as administrators to 60% of staff as administrators. Tuition goes from 30 to

administrators. Tuition goes from 30 to 60k. And that's because the federal

60k. And that's because the federal government has unrestricted underwriting, right? And if there was a

underwriting, right? And if there was a free market, then a bank would underwrite the loan and the student would have to prove that they're getting a good degree at a good college that will make money and that the tuition is

reasonable for the value of what they're going to be able to do afterwards. And

if they don't, the bank will say no.

Then the same happened in the federal home loan program which caused housing bubbles and then the same happened in healthcare because of Medicare, Medicaid. And the cost of drugs is

Medicaid. And the cost of drugs is largely driven because of the government's involvement. And then

government's involvement. And then everyone says, the state administrator and the politician, I can solve that problem. give me more money. And then it

problem. give me more money. And then it literally fuels the fire and you're pouring gasoline on the fire and we get to this moment that we're in today.

>> That's right. With that said, I would I I want to So there's like three or four things are all good things I want to kind of there's Mumani uh and the Mumani machine, there is the um there's the

housing, education, healthcare piece which is kind of and then there's the New Deal. So go in those layers, right?

New Deal. So go in those layers, right?

So on the Mani machine point like what um I think a very important distinction that we see in communism but that's also helpful in America and you know socialism is the communist party and the

and the people right lots of things that the communist party did were actually relatively good for a party member even if they actually made the whole country and themselves poor in absolute terms

but worse for the people and so for a lot of the Mumani machine the nonprofits will make money on this right like that's to say they will get their salaries because they will just let's

say that's 17% of the city or something like that they will raise taxes pull in topline revenue and the political billionaires will allocate it to the nonprofits who are actual clientele

these nonprofits are basically essentially the they're they're government employed activists indirectly they get a budget from the state even if they are not.gov gov addresses to call

them an NGO you have to actually you know you don't have to call a company a non-governmental company right a non-governmental organization it's like they're so close to the government they might as well be the government so you have to call them an NGO because of that

right okay so these um once we realize actually that that's their viral loop right as you said but basically it is cause a problem reallocate the monies to

to for the problem to cause more of the problem and and the thing about the intentions by the Okay, I will push back a little bit on that. Actually, a lot in some ways because >> their their they their their good

results, forget intention for a second.

If we just look at the numbers, the number that they're making go up is the budget of their nonprofit.

That's what they're really focused on.

Yeah.

>> Like everything else, they're like, "Oh, you know, bad things happen. I guess,

you know, somehow the needle's >> the KPI is because of my uncontrollable >> circumstances." But if their NGO budget

>> circumstances." But if their NGO budget went down, now they're on it like a hawk, right? So if they and the way I'd

hawk, right? So if they and the way I'd put it is if they're so woke, why are they so rich, right? If this was truly something that was for the good of the people, blah blah blah, set their

budgets to completely zero, right?

Defund the NOS's. In fact, even defund the police was fund the NOS's, right?

They what they wanted to do if you if you decode what they were saying, take the money away from the police reds, and give it to social services blues. It was

another kind of scheme, the the Dem scam to take money away from the functional part of society and reallocate it towards basically blue jobs. Another

example is the hundred billion dollar California train. And all of this I

California train. And all of this I actually trace back to Go.

>> Oh, I love that trains. Yeah, go ahead.

>> Yeah, the the feed the California train feed. It makes clear that they they

feed. It makes clear that they they always talk about jobs, jobs, jobs on that feed, not >> rails, you know, miles of rail, right?

It's like the Milton Friedman thing about uh you know the people in China is apocryphal but you know they were using shovels and he's like why aren't they using you know cranes to dig and they said well it's creating more jobs why don't they use spoons then right so

California took that literally and they built like like less than a mile of track or something ludicrous to put a photo of it right they made the mistake of putting a photo because then it was actually clear amidst all the offiscation that it was just a giant

bribe of blues but their 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 makework job and they and their their political constituencies, right? So that kind of

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

right? Once we realize like the blue business model is capture the state and then capture the money >> and their version of going >> 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 >> 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 that the answer

focus on. And as long as that the answer is, I will not take away that program, they say great, you you are now confirmed. That's right. And that

confirmed. That's right. And that

confirms that the capital will be sucked up and reallocated back to their interest 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.

>> That's right. And I think actually one of the consequence of that is >> by the way it's it's it's socialism.

It's 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.

>> That's right. What's 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 like 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 you know the war on crypto they tried to shut down these alternative systems and they've now

failed basically declared defeat both Republicans essentially have declared defeat I'd argue on on China and the trade war Democrats were defeated on on crypto though and so what that mean I'm not saying good or bad or just I'm just

observing um what that means now is this system has true competition so all of the failures that you're talking about like the you know or the viral loops and so and so forth now there's a

consequence because it can't just it can capture the money within its sphere but it's losing control because more things are exiting its sphere once something goes onchain or in China and you know in

onchain or in China then blue America can no longer tax and control it Right.

And actually one one thing is if you notice quite a lot of blues are just for taxes broadly. Right. Part of it is to

taxes broadly. Right. Part of it is to attack their hated enemy of the libertarian capitalist you know tech guy. But part of it is also you you know

guy. But part of it is also you you know Zuck's thing with internet.org a while back right. Well okay you know how like

back right. Well okay you know how like Google and Facebook have various initiatives to get everybody online right.

>> Yeah. Yeah.

>> That's because >> laptop for child 1 billion others three billion others all that stuff.

>> That's right. That's right. And you know I think one laptop per child was actually very successful in the form of the Android smartphone and that's you know >> motivated it. Yeah.

>> Yeah it motivated it this way.

>> Um but uh >> one of the things we take for granted sort of in our so as people of the network as opposed to people of the state. So roughly I'd say people of God

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

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 say more internet

right? That 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. So 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, you know, 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-p 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 >> I mean I I 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 I I I think that collectivism

um ends up deriving tyranny um in its absolute sense to have everyone in a socialist system or

communist system really um a true communist system requires some extraordinary controls and and and limitation of individual liberties. So

the more collectivist you become, the less liberties, the fewer liberties there are, the fewer individual liberties there are, which means the more tyranny there is. And 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

gone. But everyone also now has accountability. If you don't perform in

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 you're going to be left alone,

you're going to suffer, you're going to struggle. Um, so the question then

struggle. Um, 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 the Great

Depression. And so the New Deal meant to

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. the market failed and there's

market. the 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

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 healthare, 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 TE to be able to just do anything, which is where we kind of start to find ourselves today. I

completely agree with the the diagnosis of where we've gotten to and certainly in the US. I I'll offer a few uh given that I'm generally sympathetic to this view. Let me offer not exactly counter

view. Let me offer not exactly counter arguments just alternate perspectives I found helpful 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 you so you had dozens of startup countries basically because you also had the South America you know Latin American things right and you had 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 amidst all these American startup countries like

the United States of America won right >> and so the presence of that frontier meant that there was more productive things happening there whereas in Europe there was more in the way of just

warfare back and forth. In fact, like the Puritans actually left the conflicts of England and in fact at different points in the English Civil War, the

left side went to Massachusetts and the right side went to Virginia, right? And

so the various, you know, the the round heads went to Massachusetts, the Cavaliers went to Virginia, right?

>> And then 200 years later 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. It's like deep cultural

same sides. It's like deep cultural history, right? So in some sense, you

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. Okay. So, um, but on the

things fight. Okay. So, um, but on the point about FDR, there is I'll give a partial granting everything you're saying. I'll give a partial qualified

saying. I'll give a partial qualified defense of FDR from someone who's as critical of him as you are.

>> And by the way, I'm not being critical in a sense that it was the wrong decision. No, no,

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 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

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 you know for the first is FDR was the least bad communist dictator >> during a period where technology favored

communist dictators right or if you include let's call it collectivist dictator you include Hitler and so forth so Hitler Stalin Mao etc etc FDR was like the least bad of them right so he

only implemented like 90% marginal tax rates not 100% he only implemented the Japanese internment camps not the goologs or the concentration camps right that's that's faint praise, but it's

it's true in a sense that he was like the the least bad communist dictator.

And in fact, there's this great book called um >> gosh, it was like three New Deals. You

might have you seen this one? Okay,

you'll like this one. It actually shows how >> FDR was actually enamored with Mussolini and Hitler and and so forth before World War II, right? There's a lot of influence from both the Nazi and Soviet

side prior and and vice versa. Like

American ideas went to Germany, went to, you know, uh the the Soviet Union and so forth. Okay. So, but I would argue that

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, um after the American Revolution, less well known is something called like she's rebellion, right? Yeah. where people

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 until 1950 both in America and actually outside why you had like the unification of Italy by Gabaldi you had the unification of Germany you

had the you the French revolution and the thing about the French revolution is >> normally you and I many people like us think of leftism as something which disorders the society makes it chaotic.

Think about the guillotine. Think about

the chaos of the French Revolution or the chaos of you know the the Russian revolution. But there's one thing that

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 you know Napoleon's army or

in Russia after 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. I 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 and then laser eyes just become a killing machine right and then basically

force that's what comm vacuum too >> vacuum too right. it would flip country after country into communism, pull them into the envelope, right? And then

>> turn them like into conquerors and so on and so forth, right? So if you think of it as like a and and it's there's a linear relationship to basically Abrahamic religions like Christianity

and so on and so forth. It'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?

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

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 very

points 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

giant unicorn. They can take your market.

>> There's no nonlinearity 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 have you ever been to San Marino?

>> Uh I've not been.

>> Okay. So that's this amazing like duck build platypus. You know why? It's like

build platypus. You know why? It's like

it's like a it's like a missing link, you know, kind of thing. Like a duck platypus. It's like a It's like a mammal

platypus. It's like a 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 Gabaldi took refuge in San Marino when he was unifying Italy. So he sort of

spared it from forcible unification, right? So it still has its own UN

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

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 America left Europe for the for America they want to leave the wars of Europe they want to leave the revolutions of

1848 they left the Irish potato famine they left you know like 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 had just formed and obviously the 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 transition was invented >> and that began a rapid decentralization arc that's occurring almost 10 times as

fast as a 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 and zip like this we're

unwinding several hundred years of centralization in several decades of decentralization >> right >> and so that's why I think the western state is going to lose to the network.

It's just like if 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

argument. the western states are going to lose to the network.

>> Yes. Meaning that what I mean by that is for example the S&P 493 versus the Magnificent 7 all of the legacy American economy is basically being shut down and the in and it's all going towards

internet companies >> or the money is going towards digital asset treasuries which are like internet currencies right >> and um you can see this like when everybody's whenever anybody was giving

me the bullcase on America.

>> Yeah. The part that was working was the internet, but the internet in my view is as American as America was British.

>> Yeah.

>> Like 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. I think

they mean well. Um, 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.

Uh, but I don't think it's going to work for in fact I already think it's kind of it or at least let me put it like this.

There may be some long-term success that comes out of it but it's not going to work on the time scales 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,

survive. Of course the land survived, the people survived. Russia exists,

right? Ukraine 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. Sure. Energy capacity which

production. Sure. Energy capacity which has an inherent kind of, you know, economic uh driver has an inherent kind of economic stratum. There's

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 or do we just stall? Is does energy become the competitive force that >> so so there's several kind of layers to I think the first thing is I just start

always with calibrating with numbers, right? And very few people who I talk to

right? And very few people who I talk to about re-industrialization and so on want to really engage with like the reality of what China is. Right. Right.

Two. Yeah. It's two terowatts going to eight by 2040 >> while the United States is one going to two >> if we're if if everything goes

>> and by the way the China 2 to8 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-uclear activists and they're not they're doing

both nuclear and solar and America's doing neither nuclear nor solar or >> the nuclear roll out is insane >> it's insane right so but so energy is one piece of it but really what it is is

um like 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

families, right? They've got the kids going to school. They have um you know, basically like no crime, right? Uh they

have um 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. Yeah, Star Wars, that

spaceport. Yeah. Yeah, Star Wars, that new video that came out of that new train station that opened up.

>> Now, 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 at >> So, even if they got to suffer for the

next decade, they're okay. I mean, they could 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. That was not summer of love

and 1970s. That was not summer of 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 h at least among the older generation. Some of the younger ones have only grown up in a China which just is amazing. Right. So

but there's a consequence of that as well which is they don't look up to the west. Right. They think there's there's

west. Right. They think there's there's a Chinese version of almost everything the west has that's often better or even ahead of the west, right? Like China has flying cars, you know, e-hang and all this stuff. And you know when I post

this stuff. And you know when I post videos of this, people will say that I post this video which is like we wanted flying cars, we got them with Chinese characters. It's kind of like, you know,

characters. It's kind of like, you know, it's a riff on the Right. So, E-Hang,

it's basically like giant quadcopters, right? It's like, you know, the the

right? It's like, you know, the the iPad's a scaled up iPhone, right? 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

wheels. It's not a flying car. It only

does short hops." And I'm like, >> you know, they they 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. Um in 2015,

10 years ago, uh papers published by Chinese research labs in major scientific journals were about half of the United States. Now 50% more than the United States.

>> Yes.

>> And in every category almost life sciences and about to cross the life sciences probably this month or next month.

>> That's right.

>> Every category material science, physics, math, computational science.

>> They do not have the wification of education that happened 12 years ago. I

think you know people talk about a pipeline problem. I think part of the

pipeline problem. I think part of the issue is like something really happened to like American SAT scores starting around 2013 or so. You can see like you know them kind of drop off like this

among especially among um like white American kids, right? It kind of just drops off. And I think wokeification is

drops off. And I think wokeification is part of it like why now 10 years later there's grads who are less there. Others

will blame it on phones. Um one of the things by the way that's going to be a big thing. uh the the anti-tech movement

big thing. uh the the anti-tech movement in the US is going to be very big because the left is against capitalists.

The right isn't as fond of immigrants nowadays and the center like Jonathan hate who I like he's a he's a smart guy.

Jonathan hate to some extent Derrick Thompson other guys like this are starting to blame it all on the phones.

Right. 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. Right. So right but the issue is and actually here's I think a point which is post libertarian. Okay.

If you >> I like this frontier of post libertarianism. So which is accepting

libertarianism. So which is accepting all the premise of libertarianism and then say what's next right so the moderated internet >> like one thesis is >> by the way I want to come back to China

but yes so so one thesis is the unmodderated internet is a problem not the internet so the question is what does it mean for a moderated internet so China has a moderated internet right

because of that they're 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 and introdata at the firewall level. They have this concept of digital

level. They have this concept of 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. It's like seeing a war and everybody's yelling in Arabic and you know you're 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. Right? So, China's insulated from

to it. Right? 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

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? So, I think that the

context. Right? So, I think that the thesis antithesis synthesis is consensual moderation. opt in to a

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 that is what that is what choice is >> yeah but I mean like >> why is why is no >> why is it why is it the American system

necessarily anarchy in the sense that like because I I can watch >> a conservative media I can watch a liberal media I can watch an independent media 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 the very simple argument is going to be the mass

exodus of Americans from America like that's already happening it's you're seeing it in Europe it's happening first in Europe because Europe and America are not like separate entities. The G7 is all having sovereign debt crisis at the

same time. Lots of Brits have left

same time. Lots of Brits have left Britain. So many French have left France

Britain. So many French have left France that they're trying to pass this Zukman exit tax where it's like or no it's a wealth tax like more than€2 million euros you're tax 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 and eventually everybody's going to get super mad.

>> This is when the original feedback loop pops and and the reverse happens. Yes.

And very few people understand the history of communist societies.

>> Like the 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

this. They're losing all their doctors and so on. And they said, >> "Is mom Donnie going to build a New York wall?"

wall?" >> uh a digital version.

>> Digital wall.

>> Why? Because

>> tax exit.

>> 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

not passed. They've proposed if I get it right. There's there's some referendum

right. There's there's some referendum in California where if it passes in 2026, it was proposed on some date in 2025 and

every like uh you know one of 200 billionaires who is resident in the state and they have a list right of the 200 billionaires who is resident of the state in 2025

they have to pay uh a 5% net worth.

>> Yeah, it's called the billionaire tax. I

read that >> onetime tax, right?

>> One time tax 2026.

>> But but here's the thing. It is designed first of all it's a it's a very bad like it's it's like this crazy 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 >> 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.

Now these are billionaires which means they're running big companies which means that there's an obligate liquidation event where at as soon as that bill was proposed these 200 offices of these you know 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 his fortune is let's say it's hundred billion right does Zuck need to sell $5 billion of

meta stock 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. Right.

>> Back to the rich. What do you mean?

What's the problem?

>> Yeah. Exactly.

>> We're trying to eat the rich. What are

you talking? What are you talking about?

Doesn't bother me. I'm just So, I'm all for it. You know, once it hits my

for it. You know, once it hits my number, then I'll pay attention. Okay.

>> Exactly. By the way, the income tax in the US was also set up supposedly only for the rich, right?

>> 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. Right. Exactly. So

a billionaire. Right. Exactly. So

>> this is what I was saying. It's not

miles and or meters and kilometers, it's gallons and ounces. Like what are we really talking about?

>> That's right. So So if we take 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 sore like this. Correct.

this. Correct.

>> As Chinese yields are going down like this, right? And so that means people

this, right? And so that means people are selling treasuries, right? 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 of of the American empire basically, right? And and I think that um you know, >> Okay. So let's be optimistic. Okay. So

>> Okay. So let's be optimistic. Okay. So

So our friends in this administration, >> right, >> of which there are a lot of tech friends.

>> I I love these guys. Progressive.

>> Yes.

>> Working their asses off.

>> Yes.

>> Optimistic. optimist

>> and our friends in the private market.

>> Okay. What what what would they do?

Okay.

>> 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.

>> Save the American empire. Save the

American republic.

>> Okay. So let's say so >> without 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 Yeltson. Okay.

So that is to say um >> this administration is willing to take aggressive action fine fine. So

>> take it all the way to Supreme Court every single time >> to ensure that they can take the action.

>> Here we go. So uh a freedom cities, >> right? establish basically there's Trump

>> 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 Lucky zone for drones it could be an Elon zone for robots it could be um you know zone for biotech

right for Aluminina for example right all of these different zones which uh once they're there remember the thing about having like states bring local funding to them. Right now, once you've

got a center of excellence and uh let's say it's in Pittsburgh, okay? Or let's

say it's some red state where the governor and so on are friendly to you, right? Um

right? Um >> we just saw one in Akran, Ohio. Yeah.

>> Great. Okay. So, let's say let's say it's Texas. Okay. So, Texas, you you

it's Texas. Okay. So, Texas, you you have uh you know, University of Texas and you have uh 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

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.

>> No incumbency.

>> Yeah. There's no incumbency. No, you you take drone shots of it. You show how completely barren it was, right?

>> So then you fence it off. Okay. 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, right? And you have to figure out

stuff, right? 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 is critical.

>> Exactly. Minimum necessary.

>> You're defining a mechanism, but ultimately deregul.

>> Yeah. So the key thing is to be clear, you're not going from um insane bureaucracy to total anarchy. Instead,

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

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

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 a laboratory of the states. You had

federalism. Once it became decentralized as you point out then then that went away right so really we're saying restore the 10th amendment right bring back competition all rights not you know reserve to federal government go back to

the states right so 10th amendment activists are even more important than first or second amendment activists okay right so um 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 >> their own 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, right?

You have an open door where they're actually also agreeing on this, where you can push through 10th amendment, 10th amendment and establish facts on the ground. Like the moment you have

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, you know, 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?

>> This is the only thing I'd 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

capital. They'll attract talent. they

will be secure because they can be either see 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 you know for whatever reason you can't get a homeless drug addict out of your you know like garage like like your your

doorill in a in a um in a restaurant in San Francisco they can be like sleeping in your doors but if they're if they're inside an office building at least private property is respected in a certain way even if

public property is not right it's just an idiosyncrasy of where America is today right it may turn out by the way that in blue states that last barrier falls right and they let the homeless squad because the squatting laws >> there's a lot of squatting laws

>> yeah exactly that's right so they just let the homeless squad in your garage they um you know they they let the legal aliens do so right so it's possible in blue seats just completely goes away but in red seats at least you start with the

sacrian nature of private property and 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 stake 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 on the blockchain so they know exactly how much they're getting if it's like because you can microallocate like 50 bucks or what have you. So you make it rain for

have you. So you make it rain for individual Texans, right? Because if

it's a billion dollars like what's the population in Texas? It's like 30 million I think something sounds right.

Right. So a billion dollars that's actually you know that's pretty good right? Um if it's uh if you're getting a

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 grow I mean this is the

economic forces will >> well well I I I think you do and the reason I think you do is I think it it is surprising to me how much people even having a hundred bucks of Bitcoin gave

them a rooting interest in Bitcoin. Mhm.

>> It's like actually crazy how much it really changed their kind of impression.

>> So if you have like everybody h holding likeund >> so the freedom cities >> freedom cities >> 10th amendment dereg >> special economic zones well and the deregulation it's more than a small

thing. It's actually if you no

thing. It's actually if you no reindustrialization without deregulation why because the problem is not like the the difference between regulation and taxes very very important. Why? Or

tariffs attacks is continuous.

>> By the way, can you pull up the chart of um China's nuclear cost? Yes.

>> Versus the US nuclear cost.

>> Crazy thing. I think we should look at that.

>> So that shows that like basically this gives a >> and this this speaks to the the the importance of DREG because I think ultimately the most and and everyone can argue all day with about 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

kind of think about each one of those being one maybe one and a half gawatt.

Suddenly that's 60% of the US 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.

They're incredible. This is like the graphite balls in a cone, right? 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 um it's designed to be stable. It's designed to have like everything breaks. No one's

around. Nothing happens.

>> Um and uh the efficiency to build it is like if you look at the raw material cost, it's nothing. Like it's so little.

Uh and then obviously they just put their first thorium molten salt reactor uh into uh production into turn the power on this week.

>> Yeah. So uh and then and they have insane like reserves in thorium, right?

Like 10,000 years, 100,000 or 10 million years, whatever the number is. It's

insane.

>> There's a Saudi Arabia >> of thorium and they found a a load in China. M um so anyway so the point is like because they've enabled

and unleashed the >> this shows it's physically possible.

>> It's physically possible >> and the raw material cost is a fraction of what you're seeing here. 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. So

>> and that includes like regulatory and labor, regulatory in material, regulatory, regulatory in sourcing, uh environmental, etc. None of which you know on their own you could point to

and say this is fundamentally the problem. But like let me ask you the

problem. But like let me ask you the question. So now the federal government

question. So now the federal government is taking action. Our our Trump administration friends are taking action to say um 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

argument. like the entire thought that this thing is capital limited is wrong.

And the reason it's three-fold 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 biio medicine like can somebody take a drug or not you have to go through this entire FDA process that's multiple years that is not how Banting and Best developed insulin for example right um

did the Wright brothers get FA approval before they flew no FA didn't exist right like if you actually go back and look >> did Uber get a taxi cap medallion.

>> Yeah, exactly. That's right. So, so this entire process of, you know, regulatory, you know, 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. Yes.

their judgment. Yes.

>> In that area.

>> Yes.

>> And uh and you you have a large quote, I don't know, blast radius if you want. I

mean, for the most part, nothing is going to go wrong. Um in the I should say nothing will go wrong. Let me

clarify that there will be risks. Lots

of things will go wrong, right? Cuz just

when you're pioneering, things will go wrong. But everybody in that zone takes

wrong. But everybody in that zone takes those risks, right? No plane crashes, no planes. No train crashes, no trains.

planes. No train crashes, no trains.

>> Yes.

>> And if there weren't any, you know, like large effectsized drugs, there would be no side effects, right? So these zones are the risk tolerant zones, the frontier zones, the fractal frontier,

bring it back to the earlier piece, right? And the deregulation is like as

right? And the deregulation is like as an example, the NSF acceptable use policy. You know what that is? Um I

policy. You know what that is? Um I

acceptable use policy. I don't know.

>> This is actually one of the most important acts of deregulation ever. Why

>> use policy?

>> Here's why. Until 1991,

1999, uh the National Science Foundation had an acceptable use policy that only allowed use of the internet for academic

and military and educational use, right?

Because 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

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 will 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

internet capitalism. In that year, in that period, yeah, >> you had the repeal of the acceptable use policy and the legalization of commercial internet traffic. Yeah. Which

began >> the do era. Yeah. Right. Which led to the last 30 something years. So that's a great example of a 01. No amount of capital >> would have solved a ban, right?

>> 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 Dong Xiaoing, you'd

capitalism. Like pre Dong Xiaoing, you'd get executed for practicing capitalism, right? So all the focus on tariffs and

right? So all the focus on tariffs and taxes. The reason I think that's wrong

taxes. The reason I think that's wrong in my view. Tariffs, taxes, capital is wrong because that's just a percentage like for, you know, if I'm selling a widget for 100 bucks, you know, maybe

lower taxes, it goes from a 10% to 5%.

That's an optimization on the margin. Or

or even a tariff. Okay, maybe I get a little bit more of the market and I get, you know, a 10% bump in my revenue.

Maybe if all goes and and that tariff has to be there for a long time and so on, right? So tariffs and taxes and even

on, right? So tariffs and taxes and even capital. The problem is the cost of

capital. The problem is the cost of building things in the US as this graph shows as a lot of way things go. It's

not like 10% more than China. It's like

100x more than China. It's 100x lower than China. The reason for all that is

than China. The reason for all that is all kinds of labyrinthine processing bureaucracy that you just have to be able to scrap totally and look at exactly how just another part of 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. America can and should learn to

world. America can and should learn to copy China in a way of recognizing they're ahead in their in many areas, right? And you know what's funny is

right? And you know 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 imple censorship and so on and so forth.

The Republicans have tried to implement industrialization. Both have been

industrialization. Both have been obsessed with Taiwan. In many ways, it's sort of like, you know, they've trying to be out China China, but it's like a bad fit on top of like the American

chassis, you know, right?

>> One thing I hear a lot is um China wants to beat or destroy America.

>> I don't think that's true. What I think but but let me give it macro on why people think it's true, right? So, the

V1 is essentially people thinking that China is still Mauist, right? Mauis

Mauism was a particularly insane variety of communism. It was like psycho even

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

communism. It led to the Cambodia kill everybody with glasses kind of stuff or whatever, right? Um and then when Dung

whatever, right? Um and then when Dung Xiaoping took over in 1978, he actually uh 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?

Because it was it was similar culturally, the end of the cultural revolution was similar to the end of vokeness. Everybody was just tired of 10

vokeness. Everybody was just tired of 10 years of absolute chaos and pandemonium and they're like, "Let's just make money, right?" Like cap, you know, we've

money, right?" Like cap, you know, we've done this communism thing forever. The

the issue is this. Neither the

communists nor the far-left or the leftist 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 Dangja was a coup.

>> Okay? The American leftists want to say China is still communist because they are taken in by words and symbols, right? So they just see the

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

guys, right? And the American right wants to, you know, they only see the thing communist and they're like, you know, these are, you know, they've been inculcated to think um the label is always the same thing as what it says,

right? In many ways, China is

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? Like among other things

olds, right? Like 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

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

exalt. This is essentially without saying it, he is the this is the new Chinese emperor. Right.

Chinese emperor. Right.

>> Right.

>> And so they still keep the label communism. Actually, you know, on a

communism. Actually, you know, on a website we can do a front-end change or we can do a backend change. Yeah.

>> Right. A front-end change is very visible to everybody. A backend change, you keep the front end, but the back end is completely changed. China did a backend change.

Y >> intentionally y >> 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 it

just everything just speeds up and moves faster right?

>> So >> I think the 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 Mauist. Yeah.

still Mauist. Yeah.

>> Right. Um it is very hard for people to see clearly that that was actually a total disjunction in Chinese history.

This is also you know some of the naive things people say is like oh the Chinese think in centuries. They definitely

don't right the like the last hundred 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 Dung who

basically set up the current system they just went on this complete explosion.

It's actually crazy, by the way, cuz he was like 78 years old when he took over.

In his own way, you know, Trump is very energetic late in life. Like for Dung 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?

>> But coming back up. So, so that's that's my the reason I What's the motivation today?

>> What's the motivation today?

>> The CCP is sitting there.

>> Oh, yeah. What's their motivation?

>> So, they've got their five-year plan.

>> Yeah.

>> They What are what do what is the West?

What does the American >> um left and right >> where are they getting wrong about >> have right and wrong >> about the mindset of China and

>> you know the the the the theidities trap question yes >> like how much do we really have a trap and >> it's a great all this is great stuff >> you know and how much of this is elucory

>> yes okay great so there there's a guy uh in Asia times named Han Fezy who I find a very insightful writer writer. He's a

little bit of a troll, but he's actually very numerical in a way that's unusual among Western columnists. This 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 >> data. That's right. I think you and I

>> data. That's right. I think you and I are very numerical like charts, graphs, you know, we calibrate in this way and our founders who give us good updates have numbers, not just letters. Right.

You need both. But

>> give me the empiricism, I'll tell the story.

>> Yeah. Exactly. That's right. So Han Fezi in Asia Times had a good concept a while back like a few months ago which is basically that uh and it kind of compliments it I'll add to one idea of

my own right he essentially said China executed so fast that it went from being a threatening challenger to just totally dominant. So it obiated the thusidity

dominant. So it obiated the thusidity strap by just rapid execution and it's so now it's cranking like 300x the number of ships the US has. It's got so many ships, so many planes, and so like

>> it's adding it's adding five terowatts of power when we're adding one.

>> Exactly. Yeah, that's right. And uh

>> it's accelerating.

>> It's accelerating. Right. So you only have a war when both sides think they're going to win. Right. And Hegsth, for example, is actually quite a smart guy.

So on the um Shawn Ryan podcast last year, he showed he was aware that Chinese hypersonics could sink every US aircraft carrier in the first 20 minutes, right? And other people have

minutes, right? And other people have said similar things like the Pentagon Govini study showed that the Tomahawks and Jams 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 Rathon co said you can't decouple from China. The Secretary of Navy said

China. The Secretary of 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. If you can crank out

consumer economy. If 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

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 what I hear is they'll 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 was some papers that were published that were they were very far ahead. I won't mention what they were.

ahead. I won't mention what they were.

Uh I think >> and they stopped publishing >> and they stopped publishing.

>> Yeah. Yeah. Yeah. Probably

>> and so they get turned off. So basically

it sound what I heard was like you know the 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.

stop publishing. Yeah.

>> So because the individual scientist because the scientists I think in China still very much want to have >> their their their their knowledge on an international stage. They want to be

international stage. They want to be individually recognized for their work.

They are prideful scientists. They they

want to have an impact on humanity and the granderard scheme >> and and they don't just think about the United States. They think about the

United States. They think about the world. And um as a result, they want to

world. And um 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, which is rather substantive.

>> Yes. That's right. And basically, I mean, that is the trade-off. Ch 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

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 most Chinese people.

However, once you get to the 90th or 99th percentile, now you're surveiled and tracked and so on. Right. So, China

is uh 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 on everything that the the party says and does, right? So

it's a it's an interesting kind of trade-off where uh up to like let's say upper middle class or something like that, you know, you have instant delivery of everything. There's no

crime. The Chinese cities are glowing at night. There's books, literature,

night. There's books, literature, whatever you want. Everything is there.

And uh and people for the most part, by the way, the way that like kind of 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 like organize groups like uh like to block a bridge, for example, like they do in the US or to, you know, throw stones and so and so forth. And the party actually takes all

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

right? I'm not saying they're good. I'm

just saying they're very effective at what they do. Um, and but but I want to I want to address one of your other problems. >> I just want to know the mind is the mindset we need to destroy the United States right?

>> And do we need to we need to beat the United States versus >> we just need to be self >> stable. I I think that in 2025

>> stable. I I 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 just and again I'm only making I'm only coming to this from 10 plus years. What

I do is I read Russian news and translation. I read Indian news. I read

translation. I read Indian news. I read

Chinese news and translation because I feel that that gives me more signal than just reading WSJ, New York Times, blah blah blah. Right? So in fact I don't

blah blah. Right? So in fact I don't even like X plus Waybo 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. Okay, fine. So,

talking about. Right. Okay, fine. So,

here's my rough narrative of how China sees it. Um, and of course, China's a

sees it. Um, and of course, China's a huge place with a billion people and people have different views, but let's say, 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, right? And so at every step there,

'90s, right? And so at every step there, you know how like a great founder will give up some degree of money to preserve control. China would always preserve

control. China would always preserve sovereignty even if it meant taking worse economic terms, right? And so they would just do the the you know the tougher jobs, the more polluting jobs.

They took the pollution, they grinded, grinded, grinded, grinded for >> for generations, right? Right. Decades.

And um then the uh they kept executing a huge break for them was

after 2001 with 9/11 then like all the eyes went off China and just to the Middle East and China had years just kind of grow and just stay out of all of the Middle East stuff and Iraq and all

that crazy stuff, right?

And uh then only by 2015 so there was a critical moment there's a there's an important graph important paragraph so I can make it show you here uh this was US media revenue and was they were doing great.

>> Yep. 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 on Facebook, right?

>> And so this happened right after the financial crisis. And so we just I mean

financial crisis. And so we just I mean a 75%ish drop in like just a few years. Y

>> that really hurt them and they blamed us for that. Right. Okay. So the internet

for that. Right. Okay. So the internet disrupted let's call it blue America or Democrats. At almost exactly the same

Democrats. At almost exactly the same time, China over here, you see China rise and disrupt the Republicans. Yeah.

>> Manufacturing, right? So in 2010, basically you realize it's a forefront conflict, >> right? And this was unlocked in the

>> right? And this was unlocked in the early 90s with admittance to the WTO and >> Yes.

>> and trade freed up. But really,

>> but I the main thing about it is we have to remember also and this is not people don't are forgetting these parts of it.

China there's there's a strategy to admitting China which was uh like George HW Bush put all these listening posts in western this is now being revealed.

>> Yeah.

>> One of the reasons that George HW Bush didn't go harder on TNM is because the US was using Chinese listening posts to listen and eavesdrop on the Soviet Union

right 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 um against the Soviets right which were a much bigger threat and they were just making widgets and so on so

>> you know the leadership at that time wasn't dumb they 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 then they leave it to later leadership to figure out the next competitive move, right? And uh so

and 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 and even these like you know outlying countries, it seemed like the entire

world was under American empire, 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

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

even existing. It's not like you can look around and see it happening, right?

It's happening either overseas or in the cloud right?

>> Okay. So my my narrative is that the rise of China that basically disrupted the Republicans. The rise of internet

the Republicans. The rise of internet disrupted the Democrats and with the rise of China disrupting so let's take internet disrupting Democrats led to the tech lash 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

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 >> because what's the power structure that because the the whole like origin of wokeness is demolishing power structure.

For me, it always felt like one of these emergent things, not necessarily intentional things.

>> Well, it's very intentional.

>> This graph shows that starting in 2013, all these phrases like toxic.

>> Yeah, I've seen this. Yeah, right.

>> These all went vertical in NT in 2013, right? Contrast to phrases like Amazon,

right? Contrast to phrases like Amazon, right? These are like control phrases

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,

right? You know, or like, you know, radios going down, right? So, these are like control phrases, but you can see an editorial decision was made because the New York Times stock price was down.

Remember 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

supply. Part of this was also the Obama re-election in 2012. The economy was still weak and he couldn't really say that he'd repaired the economy. So

that's when protookeness really got underway. He pushed the race and gender buttons extremely hard during the campaign and that got the whole thing heated up. Right. And uh and 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

record. A third piece of it was Occupy Wall Street was you know pushing on economics and there are various you know central leftists who didn't want economics to be the focus. there's like

okay just go and do the race and gender and so on and stuff right so say these three things like the um let's call it the sort of cynical central left the New York Times and Obama of course the roots

of this go even deeper and there's all kinds of things going back to the 60s and 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 the key thing about it from my standpoint is you know that saying like uh go woke go broke Mhm.

>> But there's actually an alternative phrasing and this is uh I think John Stokes's coinage or others. Go broke, go woke. Why?

woke. Why?

>> Yeah. Gone broke, go woke.

>> Because once you're once once these organizations were going so so so financial, >> do you think it was the organizations?

Because it feels to me like just again aspect of it too.

>> Yeah. There there's like this economic like messiness that was happening that at that point where do you go? What do

you blame? Because you know you've got a continuing presidency. Yeah.

continuing presidency. Yeah.

>> And so you start to recognize again maybe at the end of an empire >> this idea that there's >> well you 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 organize the system to suck up all the capital and inefficiently blow it everywhere. And that's what happened.

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 um

what's the right way of putting this?

That 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 I mean with that.

>> Yeah.

>> The civil rights movement. These were

its glory days. Yeah. When we were we fought for a cause. Yeah, man. You know,

that was their like great moment, right?

World War II when they're fighting the Nazis, also a moral cause for the right.

>> Yeah. There's always I mean, you always identify an oppressor, the, you know, the the the the the invisible but now manifest reality of the system that's,

you know, broken, which is the reason we can't progress, right? Because I think we're wages stagnant around that time as well.

>> Well, I mean, inflation has also been crushing wages for a long time, right? I

mean, real real real wage growth. It

really it really went the the stagnation or the the devaluation really got >> that's that's the moment when socialism takes off which is yeah and my 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 that's there's things in the world that I see and I don't have it. And so my observation sets my

it. And so my observation sets my understanding um 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.

>> You see 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. They're

manufactured enough scale.

>> It tells you Yeah.

>> This 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?

So, this is the true devaluation of the dollar.

>> No, but I So, so this is the underlying, right? So, we we made these decisions to

right? So, we 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

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, etc. and >> or declining purchasing power and

stagnant wage growth >> on the housing, education and healthcare. Yeah.

healthcare. Yeah.

>> Those three areas if you've seen the graph that shows and we can put it on screen but >> those are three things which have soared in price. Correct.

in price. Correct.

>> While everything that technology >> correct that technology like that 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. There's no there's no

market force. There's no there's no choice >> to not buy something if it gets too expensive. So as a result it it

expensive. So as a result it it naturally gets more expensive every year and the government just says okay I'll pay more. I'll pay I'll pay this. I'll

pay more. I'll pay I'll pay this. I'll

pay more. Oh, we need bigger budget. Oh,

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 like the point that I think is really important like so, so as this happens, the cost of everything goes up, >> the purchasing power for everyone goes down. And I think what makes a human

down. And I think what makes a human happy there was a study in Jonathan Height's first book or one of his earlier books that he did called um happiness hypothesis where he showed a

psychosocial survey data on happiness as a function of income. And like at the time it improved up to $60,000 of income a year. Then it flatlined beyond that.

a year. Then it flatlined beyond that.

>> And then the the key measure of um happiness was income change year-over-year.

>> So the more your income changes from one year to the next, the happier you are, right? Right? And you can think about

right? 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

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. So when your income changes,

lottery. So when your income changes, when your purchasing power changes, when you now have more than you had last year, you're happy. If you have the same as you had last year, you start to get a little distressed. And if you have less

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 this and

that's where there's this opening for the oppressor oppressed narrative to start to take hold.

>> Absolutely. And and I think you know 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. They were born rich

descending world. They were born rich but they feel themselves becoming poor.

>> No. and 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 in a rent situation with you know 40 million Americans graduated in the last

10 years from student from college with student loan average student loan debt $40,000.

>> So 40 million Americans with Is that right?

>> Yeah. Um that might be a median number but um >> 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, and now you're graduating. And most of those kids came

graduating. And most of those kids came from a middle class family where they had positive assets, the parents own the house. Now the kids that voted for mom,

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 like where they're going to go in life. That's right.

>> And that's when the oppressor oppressed 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 um you know there's there's a graph that I think >> Americans pull back from values find them. You see this one patriotism,

them. You see this one patriotism, religion, children, community. The only

thing that's up is money which is very individualist right.

>> Yeah. By the way, this is all linked to progress uh like that 10% improvement in life every year as I mentioned like the more you can cuz 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

they're not calibrated on why essentially 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 par across the

Eurasian superc continent okay that's why Marco Aapollo sought out uh uh China. That's why uh Columbus risked his

China. That's why uh Columbus risked his life to get to India. That's why the Mongols and the Huns at various times could defeat Europeans. That's why um

you know like uh the the um you know Spain was taken by uh you know folks from 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 they

were one major power and they weren't unified at all times obviously, right?

>> Okay. So

with the infant of the industrial revolution, Europeans got so far ahead that the world economy rocketed out there. And then with 1913, 1940, they

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,

they had. And when the dust settled, everybody else had been they were under socialism. They're under communism.

socialism. They're under communism.

Japan had been nuked. Eastern Europe was in ruins. The entire European continent

in ruins. The entire European continent was just bomb shells, everything flying, right? And the US was basically

right? And the US was basically unscathed relatively. And so the world

unscathed relatively. And so the world economy was essentially balanced between North America and Western Europe. Right?

>> And so this was peak America, peak westernization, peak centralization of all time in 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 orderer. This is treated as the year zero, 1945, right? The

beginning of American Empire, whatever you want to call it, right? And so

everything is calibrated on that as the baseline as how things were to be. But

and people say, "Oh, around that time, you know, somebody without a high school degree, they could have a home and they could have a wife and kids and you know, that was a good thing for the working man." What they're not calibrated on is

man." What they're not calibrated on is that the, you know, 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 uh, you know, various ideologies, right? Okay.

>> Once the cold war ended in 1991, you see the rubber band snap back to Asia very very fast because China's no longer a communist, Eastern Europe is no longer communist, India's no longer socialist, it's liberalized, Russia is no longer

communist. Not not to the same extent.

communist. Not not to the same extent.

Southeast Asia is liberalized etc etc. Everybody is now actually competing on the global stage and for a while this seems to be you know win-win for everybody and in many ways it is

>> but the problem is that this is a huge shift in relative power.

>> Y >> and here's where the problem starts.

>> Dollar inflation because is 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. that require

to have the dollar, they need to be global number one. If they're declining in relative power, they're no longer global number one.

>> Right?

>> Whereas if they were if America was just exporting chocolates or or even cars, it could have a gradual decline to number two. Instead, it has to fight like heck

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

>> right? So the American Empire has to from like kind of the metal 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. Get right.

That's right.

>> It has to expand. If it doesn't expand, okay fine.

>> But the problem is, and getting back to the thicidity 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 fought this thing to a

standstill, maybe with the progosion thing, it could have gone another way, but the fact that Russia is being essentially supported by China, Russia's 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, the the to the Sydney strap, >> arguably Russia Ukraine was the big China US war.

>> Yeah. Yeah.

>> But by proxy, right? And so it's done by proxy where China supplies one side, the US supplies the other side, they slug it out and the Russians are basically winning. Otherwise, there wouldn't be

winning. Otherwise, there wouldn't be peace talks. Like there would just be

peace talks. Like there would just be dictating terms, right? 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, right, industrially.

>> And uh 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?

They're calibrated on 1950, but you can only go down from there, >> right?

>> And so, so because of that, that's like this, you know, we 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 they rebuilt the church many just had a total identity crisis because they were atheists and they didn't have any meaning and so and so forth so they

drank and drugged themselves you know right and there all kinds of crazy wars after the Soviet Union ended and so that question is what's being litigated right now today on on X at everinccreasing

volume of like who is an American is like who is a Soviet.

>> Yes.

>> 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 another piece.

Do you know the ethnic piece of the end of the Soviet Union?

>> No.

>> So we know the economic piece right obviously communism didn't work and you know like eventually the planned economy failed. All true. But the ethnic piece

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. We we're the ones who bled the most, you know, and we're paying for the union. So both parties felt

the union. So both parties felt oppressed by the other. Yeah. Yelton was

on the side of Russian nationalism, Estonians on the side of Estonian nationalism. Polls, you know, like

nationalism. Polls, you know, like everybody was in in for their own tribal nationalism. The whole thing came apart.

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, you know,

ex like no matter what, somebody hates you in America, unfortunately, right?

And 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.

>> Yeah.

>> And that's why I think it comes next.

But I think um one other piece I'll say a very big thing that is going to become a thing in the future is uh people are going to be mad at those who leave. They'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 oneliner response and more because I Jason and I have kind of talked about this like did

the Irish Americans betray Ireland by leaving Ireland? Should they have stayed

leaving Ireland? Should they have stayed in Ireland? actually more people of

in Ireland? actually more people of Irish descent outside Ireland, right?

>> They didn't really betray Ireland. What

what would that even mean? The potato

fam and other things that things were breaking down, but obviously some Irish stayed back. Why didn't they stay back?

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. So they left

there. So they left >> the Puritans who came to mass the Massachusetts Bay Colony, they left, right? Because they felt, you know what,

right? Because they felt, you know what, let me make make a better life abroad, right? the Germans who came from the

right? the Germans who came from the revolutions of 1848. They felt better life abroad. And then more recently,

life abroad. And then more recently, obviously Jews coming from the Holocaust. You have uh the Persians who

Holocaust. You have uh 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 and and emergency and so on and so forth. This stories that Americans don't

forth. This stories that Americans don't necessarily know.

>> And uh obviously there all the dysfunctional governments in Latin America and South America like you know Castro and that's a story that many Americans do know. But um Venezuela.

>> That's right, Venezuela. So, the point being these people like Russians, Chinese, they're not dumb people. Like,

look at look at, you know, they they're pretty good at math and they've got a, you know, great civilization at various times in history, but they were hit by this mind virus of communism. Their

society's 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 in fight another

fight who? Oh, stay in fight another American for America. That's what they mean by it. see 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, they

don't we don't want you there.

>> Tech guy, if you overcontribute, I'm gonna penalize you.

>> Yeah. Exactly. That's right. So, so on the one hand, they'll be mad for you for leaving. The other hand, they literally

leaving. The other hand, they literally are putting up things saying, "Tech guy, get out." Right. Um then stay and fight

get out." Right. Um then stay and fight for what? Right. Because like it's just

for what? Right. Because like 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.

>> And finally, stay and fight. How? Yeah.

Well, because staying actually is surrendering. Why? Because if you stay

surrendering. Why? Because if you stay in California, you're subsidizing it.

Yeah.

>> Right.

>> And so leaving is actually fighting, right?

>> So anyway, so that's how I how I think about it. Getting getting these zones

about it. Getting getting these zones going, getting these freedom cities going, getting these special Elon zones going.

>> I think that's that's a positive vision.

Yeah.

>> We want to work on.

>> Yeah. Well, I'm sure people in the administration will listen.

>> Okay.

>> And try.

>> Great.

>> Um I do think it's important to try. And

I do think like look I mean America was designed to have mechanisms of selfcorrection. I think we've talked a

selfcorrection. I 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.

Um but I do think that there's a significant will and I do believe deeply in the notion of agency. Um, but it requires collective agency and there's

there's collective forces >> that have very disperate views on what their agency is intention intending to do and that may ultimately lead to not

being able to get out of the cycle uh fundamentally. But

fundamentally. But >> I I I will say this, you know, there's there's a there's a lot of amazing Americans. 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 be being able to reboot from scratch. Yeah.

>> The 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

right? Being able to reboot from scratch.

>> Yeah. I just don't know if the average 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, you know,

cities. And crucially, that's, you know, 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

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 built.