How two superpowers built fundamentally different futures | Dan Wang and Kmele Foster

You said earlier that I was um painfully pessimistic. Uh Neil, and here's where I

pessimistic. Uh Neil, and here's where I want to be a little bit more apocalyptic. If you're an American or a

apocalyptic. If you're an American or a Japanese or a German automaker, it takes you something like 6 years to conceptualize a new vehicle brand, a new vehicle model, and then actually get

that out um to the market uh into the streets where people are driving it. In

China, the statistic is something like 18 months uh to 2 years. China built its very first highway in the year 1993. 18

years later, China built uh one America's worth of highways. Nine years

after that, it built another America's worth of highways. China has built uh essentially one New York City plus Boston's uh worth of housing every single year uh for roughly the last 30

years. China has a manufacturing

years. China has a manufacturing workforce of something like 70 million people in which they are building some of the most sophisticated electronics every single day. I think that, you know, it it doesn't sound good to me

that Apple and Nvidia are worth as much as they do because they are also deliluding us into what actually matters. Is, you know, our answer to a

matters. Is, you know, our answer to a member a struggling member of the working class in America going to be something like, well, let them eat iPhones or um let them eat GPUs. I think

that is not compelling enough of a solution.

Dan, I'm I'm delighted to be here in conversation with you. I want to commend you on what I think is a really interesting and compelling book that offers a a different perspective on um China and you and the US. Most of the

time you encounter these conversations about USChina relations and it's all about the geopolitical rivalry, the fight, who is going to win, who's going to lose. I think a kind of patient,

to lose. I think a kind of patient, thoughtful appraisal of the differences between these two important quintessential um powers is something

that was long overdue. And I think just to get us started here, well, two things actually really quickly. One, Dan's book is something that it sounds like a lot

of you have read already. Um some of you haven't. There will be spoilers, so to

haven't. There will be spoilers, so to speak. Um but it's still well worth

speak. Um but it's still well worth reading. Um, one of my favorite things

reading. Um, one of my favorite things about the book, Dan, is that closing chapter which opens with this interesting and for me emotional um,

kind of recounting of your your trajectory, your family's trajectory for you to be here now. And I I actually want to start in a somewhat unconventional way um by having you perhaps give a little bit of the sense

of your backstory, how you came to be here in the United States working on this particular topic and and why you thought it was important for a book like Breakneck to exist.

>> Uh thanks so much Camille. I just

thinking about my own backstory. I uh

grew up in the southwest of China which is a very mountainous place. Uh people

eat very spicy food. The stereotype that people have around the southwest of China is that people sit around sipping tea, telling jokes, and I really believe that we are the funniest region of

China, much funnier than the the the much more serious, prosperous zones. Uh

my family and I immigrated to the country of Canada uh when I was 7 years old. And I mostly grew up in Canada. I'm

old. And I mostly grew up in Canada. I'm

still a Canadian citizen. Uh and so uh we moved to um suburbs of Philly. um

anyone from Bucks County or or or Pennsylvania here. Um a a great place to

Pennsylvania here. Um a a great place to be from. Um and so we have been uh

be from. Um and so we have been uh thinking a lot about you know what it was like for us to move out of China um right before essentially the Chinese

economy took off in a really big way to you know enrich quite a lot of people uh introduce more novel forms of repression at the same time and you know thinking a lot about you know what is really

quintessentially different um between the US and China and so I used to work here in San Francisco I used to work uh here until uh the start of 2016 and I

moved to China uh at the in 2017 to um think a lot about what the Chinese were up to in terms of a lot of different technologies. Now when I moved out of uh

technologies. Now when I moved out of uh California um then it really felt like California Silicon Valley was this was the center of the world in all sorts of

uh very important ways. The c the future was being created here. um the the the most important uh the most talented people were moving uh to California. And

I was also kind of struck that so many of the uh businesses being created here were very consumer-driven. Um there was a lot of cryptocurrencies at the time, at the time we hadn't even gotten to B2B

SAS yet. Um, and uh, when I learned

SAS yet. Um, and uh, when I learned about what was going on in China, thinking about made in China 2025, a big industrial plan that Beijing had announced, they were working on things

like ultra high voltage transmission, memory chips, electric vehicle batteries. That felt like a very

batteries. That felt like a very exciting story to try to study at the time. And there part of the reason I

time. And there part of the reason I asked you to tell that story um or at least to talk about that kind of context is because in the account that you offer there are two things that really stood

out to me. The the first is just your parents experience of leaving China and coming here and your own experience as this essentially first generation child

who grows up in this country who this is very much your identity and kind of all you know. In the book, you explain that

you know. In the book, you explain that this was clearly the right decision for you personally, that your passion, the things that you work on, you you could kind of only do that here. But for your

parents, it's a bit different. Um,

immigrants to this country, we our families end up abandoning everything.

You leave behind everything that you know, and you come to someplace completely alien to try to make a life for yourself. And in my experience,

for yourself. And in my experience, coming from the West Indies, this the sentiment has always been, of course, that was the right decision to make.

every single time I've gone back to visit Jamaica, I see young men about my age and I know very well that I didn't want to be that guy. I'm happy to be this guy. Um, but for your parents, they

this guy. Um, but for your parents, they had a real quandry about this because of the robust growth that China has seen in terms of their interactions with family members and friends who are still there.

Could you talk a little bit about kind of the contrasting experiences of their generation um growing up and experiencing the progression um of China economically there domestically versus

what your parents had to experience here?

>> Yeah, I think the first thing to say is that um I so glad I grew up in Canada if I and also in the United States. I split

high school between um Ottawa as well as Philly area. And without this sort of an

Philly area. And without this sort of an upbringing where I could have really, you know, read the books that I really wanted to read. I was a philosophy major in college. I wouldn't have been able to

in college. I wouldn't have been able to write this sort of book and engage in the sort of intellectual work that I'm quite proud of. But as you mentioned, Camille, it was a slightly different trade-off for my parents. My parents

were living in um southwestern China.

This is a kind of a backwater economic backwater of China uh back then and even now. It is a giant backwater where not

now. It is a giant backwater where not too much goes on. Um but still they by virtue of being college graduates in China, they were also urban residents.

Um they could have been allocated a few apartment units by the state which is one of the big drivers of wealth that a lot of Chinese have been able to enjoy.

If you are a resident of a first tier city like Beijing or Shanghai, you were able to liquidate just one of your apartments uh and then you could send your kid off to college, a private

university in the US and something like USC, give her an apartment as well and um you know give her a Mercedes as well for for her to drive around. And my

parents really missed this um giant wealth boom that um they they they they could have um participated in if they had stayed. And so this is one of these

had stayed. And so this is one of these um sort of tragedies I feel that I wish that you know America could have had you know rising wealth for many more people um definitely not to the same scale as a

lot of Chinese but something closer to that scale. I think a lot about how if

that scale. I think a lot about how if you were you know Chinese growing up and let's say born in the early 1990s which is um roughly when I was uh born you

know you could have seen your world transform in all sorts of big ways.

China built its very first highway in the year 1993, 18 years later, China built uh one America's worth of highways. Nine years after that, it

highways. Nine years after that, it built another America's worth of highways. So, you know, if you were born

highways. So, you know, if you were born in 1993, by the year you le reached legal driving age in China, you would have been able to drive on an America's worth of highways from uh starting from

zero. Um, China has built uh essentially

zero. Um, China has built uh essentially one New York City plus a Boston's uh worth of housing every single year uh for roughly the last 30 years. And so

China is just engaged in these giant spasms of construction. They're making

the cities uh nicer in a lot of ways as well. So um if you're a resident of a

well. So um if you're a resident of a city like Shanghai, maybe you didn't have uh subway systems growing up uh and and now you do. maybe didn't have a lot of parks uh growing up and now there's

about a thousand parks in Shanghai which has doubled from the year 2020. You're

getting cleaner air as well and uh you feel in general uh still a sense of rising wealth. One of the things that I

rising wealth. One of the things that I struggle with a lot of Americans is that especially if you are living in a place like San Francisco where there simply isn't a great deal of construction especially in a place like Berkeley um

there which just hasn't built enough housing which hasn't updated and renewed and expanded its subway systems for a very long time you know you see your life being pretty static um and you kind

of expect the future to look relatively similar as well so maybe you lose a um McDonald's and then you gain a Dunkin Donuts um but that's I think there's a little bit more to life uh than than

that. And so um if you are are Chinese

that. And so um if you are are Chinese and you're you're seeing these bridges go up, you're seeing these um highspeed rail systems go up, I think this is not just an economic program really to try

to wire up the city uh the the country um in order to be quite a lot better. I

think this has also really substantially built a political resilience for the communist party as well in which people have seen momentum from their lives uh get better in the past and they expect

that their lives will be better in the future and this is what I wish for a lot more Americans because my parents have um are now in suburban Philly which I think is uh pleasant uh but extremely

boring. um they they're kind of the

boring. um they they're kind of the highlight of their weeks uh is to go to the Costco um every week um like a lot of immigrant families as well as a lot of um middle-ass Americans. Um but I I I

wish that there could be something more in which um there is a sense of physical dynamism in this country because this can build a lot of optimism into the population as well. As you were describing that circumstance where

people are growing up and and experiencing all of this profound change over the course of their lifetime, seeing these cities explode into being, I thought about something Peter and I believe in the context like this, I can

mention him with just one name and you know who I'm talking about exactly.

Peter's adage, we were promised flying cars and all we got was 140 characters.

They've got their flying cars. Um, and

interestingly, I suspect that has to do something to one's psyche. there is a sense in which there's that kind of disappointment as expressed by Peter um amongst Americans um looking at the

technological landscape and perhaps VCs in particular and maybe things are changing and AGI is right around the corner I hear I'm not exactly sure if that's true we don't have to debate that

now but I do think that that contrast and the perspective that is that essentially emerges from a circumstance where you're seeing that much change is

perhaps of a piece with this framework that you have established in the book and it's it's there in the opening and I suspect most people are familiar with it but if you could talk about the difference between the engineering state

and the lawyerly state.

>> Yeah. So China is a country I call the engineering state because at various points in the recent past the entirety of China's most senior leadership all nine members of the standing committee

of the politic bureau had degrees in engineering of a very Soviet sort. And

so these were people trained in electrical engineering, hydraulic engineering, mechanical engineering, civil engineering, uh etc. And uh what is the issue with engineers? Engineers

build a ton of Whether that is uh roads or bridges or highways uh or um hyperscalers or homes, coal plants, solar, wind, nuclear, you name it. Um

they are constantly building it. So they

uh really engineer the physical environment. I contrast that with uh the

environment. I contrast that with uh the United States which I call the lawyerly society because um you know I moved from China uh to the US at the start of 2023

to be a fellow at the Yale law school.

And it really feels like, you know, in order to reach the White House, um, first you need to get a ticket from, um, the Yale law school. And, um, you know, it's really striking if we take a look at the American elites as well. Uh,

first 16 US presidents from George Washington to Abraham Lincoln, 13 of them were lawyers. If we read the Declaration of Independence, it really sounds like the start of a legal case.

Um, and the Democratic Party is especially lawyerly. every single

especially lawyerly. every single nominee to be president uh from the Democrats between 1980 to 2024 including Kamala Harris had gone to law school. I

think this is just one of these really striking ways uh in which the uh Americans are really dominated by the lawyers. There are pros and cons to both

lawyers. There are pros and cons to both of these societies. I think that um for the most part physical dynamism in China is a good thing. Um but it can also veer

badly wrong. um in China. I also lived

badly wrong. um in China. I also lived through um the year 2021 when Ciin Ping in a fit of hubris decided that he was able to control COVID and the Americans

were not and so he really felt that he had a free hand to enact these really radical uh agenda items. So they are also engineers of the economy. Um, so in the year 2021, Ciin Ping tried to

trigger what he hoped was going to be a controlled demolition of the real estate sector in China because he felt it was overleveraged. And he really tried to

overleveraged. And he really tried to push a lot of smart people away from working in cryptocurrencies or companies in uh financial services or video games

away um from these frivolous activities into more strategic technologies like semiconductors and aviation. um really

to try to make them work on strategic technologies as that. China is also uh really made up of engineers of the soul.

Um so I spend a lot of time thinking about um social engineering projects like the one child policy as well as zero covid in which the number is right there in the name. There's no ambiguity

about what these policies could possibly mean if you're an enforcer uh from the bureaucracy. And so you know China is

bureaucracy. And so you know China is made up of physical engineers. It's made

up of uh economic engineers. It is made up of engineers of the soul. After uh

six years of living in China, including um throughout the entirety of zero covid, I thought that uh you know engineers are are a little bit much. I

started to crave the pluralism that's available uh in the United States. I

started to crave speech. I craved um the ability to buy uh books once more. And I

think the issue with um lawyers is that uh they block everything, good and bad.

So you don't have stupid ideas like the one child policy but you also don't have functional infrastructure almost anywhere especially not in the Bay Area or not in the New York area either.

>> Uh this particular conference has a number of sponsors and I think in the progress movement broadly speaking it is probably fair to say that like classical liberals people who favor free markets

are going to be over over it's going to overindex for them. Um, and as such, I can imagine a story that someone with those inclinations might tell about how China achieved the prosperity it did,

despite the fact that it has all of this kind of central planning that you just described. And that story might go

described. And that story might go something like, well, sure, they've got a bunch of engineers, but once they get into government and in power and they're they're kind of fighting out, duking it out amongst the different factions of

the CCP, ultimately they're just bureaucrats. and all of that kind of

bureaucrats. and all of that kind of pushing things around and trying to engineer particular outcomes. I don't

know how well that's going to work out in the long run, but to the extent they've been successful thus far, they're mostly just copying the map that we've laid out for them. Okay, you've

built some tall buildings. Okay, you've

got some factories. We had factories.

You just kind of stole ours. Um you

you've got cell phones and all kind of other stuff. You you essentially clone

other stuff. You you essentially clone the companies that we have. Is is China a a genuinely dynamic innovative economy in a way that is going to be sustainable

or are they just playing catch-up? And I

I ask in a somewhat provocative way and clearly I I understand that China is innovating but I do think that there's some truth to that narrative. So how how true might that be and how how is it

false?

>> I think that the Chinese are genuinely innovative in all sorts of ways. um

although I'm not sure how sustainable their innovation is going to be. Now,

you know, the first thing I'll say about um innovation is, you know, how do we how should we really understand innovation? And you know, here we are um

innovation? And you know, here we are um thinking about innovation from the Bay Area. And I think the way that most of

Area. And I think the way that most of us think about innovation is to, you know, imagine um putting someone like uh Steve Jobs. We're taking a Steve Jobs,

Steve Jobs. We're taking a Steve Jobs, we're putting him in a garage, we're sending some LSD after him, and then um an Apple computer uh comes out. And I

think that is one way to understand uh how innovation works. I think the Chinese way is to uh to treat the production of the computer itself as a part of the innovative process. Uh that

is going to be very very important as well. And so the way that I think a lot

well. And so the way that I think a lot about uh Chinese innovation is that you have these um big companies uh run by entrepreneurial uh founders who are very very competitive. And so you know we

very competitive. And so you know we have something like you know we can see something like u there's about 50 major automotive makers in China and they are really fighting among each other. Um

there's about something like you know uh six or seven big uh smartphone makers and they're competing very fiercely against each other. Um China is the center of a lot of global production

today. Um China is the center of the

today. Um China is the center of the production of a lot of electric vehicles, a lot of electronics. name any

item that you want and China is producing something like a third to twothirds of a lot of these critical um technologies. I think the way that I

technologies. I think the way that I really understand um Chinese innovation is that it really has two components.

The first component here is that um there simply is a lot of practice going on in terms of manufacturing a lot of different things. And if you're not

different things. And if you're not manufacturing a lot of these things, if your R&D loop is really cut out from your manufacturing loop, well, I think that um you know practice is really the

way to maintain and progress on a lot of different technologies. China has a

different technologies. China has a manufacturing workforce of something like 70 million people in which they are building some of the most sophisticated electronics every single day. They're

trying to solve three new problems uh every day before breakfast. They're not

thinking so much about what's going on in the mind of CZ Ping. they're not

thinking so much about what's going on in the mind of Donald Trump. They're

just trying to solve a lot of these problems. And once you're in this crucible of trying to, you know, make new products and make them better, then it becomes, you know, really, really valuable for them to be able to progress

up the technological ladder because they have the practice and the Americans don't. The other part that I think is

don't. The other part that I think is really important uh in China is that it is a fiercely competitive environment.

And so once you have something like, you know, 30 to 50 uh major EV makers, once you have something like a half dozen smartphone brands, they're competing really fiercely amongst themselves. And

so, you know, one statistic I think that is out there is that if you're an American or a Japanese or a German automaker, it takes you something like six years to conceptualize a new um

vehicle brand, a new vehicle model, and then actually get that out um to the market uh into the streets where people are driving it. So it takes about six years for Americans to really do that.

In China, the statistic is something like 18 months uh to two years. And so

you know the Chinese haven't um you know come over to hypnotize a lot of Detroit to make them move slower. Um you know that Detroit is kind of just moving slower all on its own. And um so is

Tesla increasingly in in terms of not uh competing fiercely enough for these sort of things. And so, um, China is just

of things. And so, um, China is just doing really well by being the center of production as well as, uh, having enough entrepreneurial fire to be super competitive.

>> Could you speak to to where these Chinese products are going, especially when we talk about these brands that are competing with very iconic American brands? Tesla has defined the EV market

brands? Tesla has defined the EV market here in the United States, although there's a lot more competition now. But

what's happening with Chinese EVs? Where

are they being sold? Is it primarily in that domestic market? Similarly with

cell phones? I mean, Apple is the kind of iconic cell phone brand, dominates the US market, used to dominate the Chinese market, and no longer does. Um,

what's what's happening there? What's

the trajectory look like? And do you have any kind of predictions about what's likely to happen to brands like Tesla, brands like Apple around the world as they continue to face a lot of

pressure from from the Chinese?

>> Yeah. So my sense is that um my my feeling is that uh made in China right now is a sign of quality to me in the way that made in Japan is a sign of

quality to many people and I expect that in a decade from now um many more people will agree with that assessment that made in uh made in China is going to be a sign of strong quality.

>> Can you say can you say why?

>> Um I think they are um getting better.

They're fixing a lot of their quality issues. Um they are being more

issues. Um they are being more innovative. they're introducing um

innovative. they're introducing um better products and so um you know if we're thinking again about something like electric vehicles because they just iterate so much more quickly they're able to produce cars in something like

two years um when it takes the Americans something like six years you know they just have a lot more uh iteration they have a lot more product cycles um to work off of such that I think by many

accounts including by the account of the uh CEO of Ford Motors um the Chinese vehicles are not only better in a lot of ways they're also cheaper than the American cars because of lower labor

costs as well as greater design. And so

I see the America um the American manufacturing sector as being substantially weak and um getting even weaker. Uh if we take a look at um

weaker. Uh if we take a look at um American Apex manufacturers, these are names like Intel as well as Boeing as well as Detroit as well as Tesla, you

know, I think all of them have um suffered some degree of sorrow over the last few years. And in the case of Detroit um over the last few decades and I think most of that has not been to um

due to China. I think most of them have been missteps, strategic missteps by themselves. Um but there's all sorts of

themselves. Um but there's all sorts of ways in which the American manufacturing um base looks very broken to me. In the

early days of the pandemic um American manufacturers were not able to make relatively simple goods like masks and cotton swabs in quantity. It was mostly up to the Chinese that were able to to

make these sort of things that a lot of um American manufacturers simply ran out of capacity to make much of many goods at all. A lot of the American defense

at all. A lot of the American defense industrial base looks pretty broken to me. So, you know, the US hasn't been

me. So, you know, the US hasn't been able to really raise production of munitions uh after it shipped a lot of that to Ukraine and its self-defense against Russia. Um, if we take a look at

against Russia. Um, if we take a look at something like naval ships, um, according to the government accountability office, every class of uh, American US naval ships is behind schedule by something like 18 months to

5 years uh because Americans uh, can't build ships very well anymore. Um, the

US military doesn't seem to be producing drones um, cheaply at fast enough of a pace. And so out of first approximation

pace. And so out of first approximation to me the US manufacturing base has rusted from top to bottom. And this is before even um much more substantial uh

production uh challenges and competition from Chinese manufacturers once they um upscale and are able to compete with Americans on on the higher end bits. Now

you've named a lot of the things that are going really well um and certainly better perhaps than their US counterparts but I know that there are also a lot of challenges as well with

this kind of engineering approach. Um

there is the discounting of civil liberties and human rights the the kind of lack of pluralism and diversity of perspective and my own perception of things certainly as someone who's

operated in civil liberty spaces for a long time is that things like free speech actually pretty vital um when it comes to innovation. China is hit some

headwinds in recent years. it's had some serious trouble with respect to um the kind of glut of debt related to its real estate holdings which are way too high.

Why are those things happening? Why are

they seeing that sort of recession? Um

and I don't mean a kind of economic recession but just in general given all of the advantages that you've laid out.

I think that free speech is um absolutely valuable for society and I really like that your um Camille in your media platform is really thinking about

um freeth think and um um and big think.

So I think that free speech is totally uh important for civil society. But I've

become slightly less convinced that this of this idea that autocratic countries cannot have very substantial innovation programs because there are enough

examples uh throughout history of highly autocratic regimes um doing very very well in terms of becoming technological and manufacturing leaders. If I'm

thinking about something like Nazi Germany, uh the Nazis certainly produced a lot of uh very sophisticated vunderafen um in order to have uh V2

missiles as well as new very powerful fighter jets. I think a lot about

fighter jets. I think a lot about Stalinist Russia in which the um regime was highly repressive. um it sent a lot of really top scientists into the

goologs and to have them work in prison camps and that there is a very strong track record of a lot of these scientists um basically staggering out of these gulogs once Stalin needed them

and then putting them to work uh such that they were able to make a lot of really good tanks and a lot of um really good equipment uh for the Soviets as well. Um the Soviet Union was highly

well. Um the Soviet Union was highly repressive at a time when it became um very sophisticated at making uh something like the space missions. And

so the Soviets um were kind of beating the Americans uh in the early days of the space race and pretty much everything you know first uh satellite in space um first person in space, first

dog in space uh as well. And so these were all pretty important achievements.

Um but it didn't matter because the Americans um um beat the Soviets to the moon. But it's again this at a first

moon. But it's again this at a first approximation it doesn't really look like um autocracy is going to the lack of free speech is necessarily going to defeat a lot of invention as well as

innovation. And so I think the the

innovation. And so I think the the paradox here is that I think for a lot of scientists the most crucial input that they need to make a lot of important products is simply money as

well as funding. And you know there's some research now to indicate that uh in the Soviet Union, you know, part of the reason that the Soviets were really good at something like mathematics or chess

is that a lot of these top scientists were treated within themselves to be able to do really well at um at mathematics or or at chess and they were given the funding uh in order to to do

so. And you know, if you don't have the

so. And you know, if you don't have the funding, you can't really do the science. And so this is where I'm I'm

science. And so this is where I'm I'm again slightly worried about the US because the Chinese keep funding um science. Uh Cinping keeps plowing more

science. Uh Cinping keeps plowing more money um to the scientists and um right now under this administration there's some cuts uh to the science uh funding

whether that's the NSF. A lot of the NIH funding has been restored but there's a lot of uncertainty among uh the scientists about you know how they could really have their funding in place.

>> You mentioned Stalin, you mentioned Nazi Germany. In both instances, yes,

Germany. In both instances, yes, innovation, but also kind of burn brightly and then go out pretty quickly, perhaps for different reasons. But it's

also the case that the that Russia is where you get lysencoism. So this is something that looks like science, perhaps walks like science, but is not in fact science. It it feels like that

is a particular risk in an autocratic system.

>> Yes, absolutely. And I want to highlight that um you know one of the biggest problems with China and maybe this is the big problem with China and part of why they are having a slower economic

growth as well is that the fundamental problem with um engineers in the engineering state is that they are not simply physical engineers. Um the

fundamental problem with China is that they're also social engineers and you cannot have one without the other. And I

think a lot about um the disaster of uh the one child policy which I write about as a campaign of rural terror that was really meted out against female bodies

peing throughout the 1980s. And

according to the official numbers of uh the the Chinese health yearbooks, China had conducted something like 300 million abortions throughout the 35 years of the

one child policy. Um China sterilized about 100 million women. It sterilized

about 25 million men. And so, you know, this is just a really horrific um policy that the um that the engineering state was able to implement. I think only the engineers could have done something like

this. I trace out a little bit of the

this. I trace out a little bit of the history of how there was a missile scientist that got into the ears of the pilot bureau um who said that, you know, I'm able to do really good science here.

I've worked out the math. The optimal

population for China is something like 700 million people. And we have an an uh you know a really elegant solution available to us namely the one child policy. And this sort of a a stupid idea

policy. And this sort of a a stupid idea could only have been implemented um by the uh engineering state because it really val rallied so many enforcers essentially thugs to deliver a lot of

forced abortions uh to women. So that

was one of the big problems in the engineering state. I think a lot about

engineering state. I think a lot about the problems of um economic engineering as well. um Xiinping tried to impose

as well. um Xiinping tried to impose this um controlled demolition of the real estate sector. Actually the um property sector in China is still

undergoing this slow rolling crisis that is a meltdown that is hurting a lot of the wealth and hurting a lot of the business confidence of a great number of people. I think a lot about how many

people. I think a lot about how many people are just tired of living in the engineering state much as I was that there were something like 13,000 millionaires who departed from China who

immigrated from China in the year 2023.

They fled to places like uh Japan and Singapore and the UK and the US. A lot

of creative types um have fled to New York, Amsterdam um um northern Thailand.

I spent a lot of time with uh people in northern Thailand who were Chinese who were gathered in a setting much like this one in which they were giving conferences to each other. Um they were

trading cryptocurrency. They were uh

trading cryptocurrency. They were uh smoking drugs that are legal in the state of California um really to try try to have a good time um because they were tired of uh the engineering state. I

think a lot about um the fact that you know uh in 2024 in certain months something like 30 to 40,000 um Chinese immigrants were being picked up at the US Mexican border um because um they

were trying to walk across into the US and so you know it doesn't sound like um you know a great rejuvenation of the Chinese nation which is what the communist party calls it with so many people are itching to leave um the

engineering state and so I think that they have a lot of great successes namely around manufacturing but at the same time this has triggered a lot of disaster disastrous for the people. I'd

love to just spend a little bit of time talking about the US situation in particular and the the current political situation. The Trump administration is

situation. The Trump administration is almost 10 months in now. Um and I know you've been critical of the tariffs. Um

you've had some critical things to say about Doge and other things related to conservatives, but I'm curious what you make of the administration overall. It

seems like a lot of what you describe in the book, certainly the need for infrastructure to be built. We need more power plants. that wasn't happening. Um,

power plants. that wasn't happening. Um,

at this point there does seem to be a lot of pressure being brought particularly from the tech industry towards the White House to encourage actually making investments um, in these particular areas and building out that

infrastructure. Could you talk a little

infrastructure. Could you talk a little bit about that and also talk about the the trade war? I'm curious what your perspective is on perhaps why the tariffs haven't had more of an impact um, so far and even just the threats of

tariffs and perhaps give me some appraisal on on who is winning the trade war. Yeah. So, I think that there are

war. Yeah. So, I think that there are potentially good things to happen with the Trump administration. Potentially,

there is a um uh some good work being done with deregulation. Potentially,

there's um going to be a lot of progress with um AI and thanks to efforts of folks like Dean Ball who worked on the AI action plan. Um and potentially there is going to be a lot more of an energy

buildout in terms of especially around nuclear power as well. And I guess, you know, one of the the challenges with um what I see with the Trump administration is that a lot of the benefits are always

potential and in the future and uh could come um but haven't in fact been realized in a very substantial way and right now I see what actually has happened with the Trump administration

and I don't um see that as a really considerable uh success. So I am >> you think in g the AI in particular, you know Ting.

>> Yeah, maybe maybe with AI um maybe AGI is around the corner and perhaps that is going to be due to the Trump administration's policies. I'm a little

administration's policies. I'm a little bit skeptical that both things are are quite true at the moment. If we take a look at um something like US manufacturing, the US has lost about

40,000 manufacturing jobs since uh liberation day in April. So the US keeps losing manufacturing jobs um because tariffs are really creating a lot of uncertainty among manufacturers and then

they stop reporting the data and so you know we don't even know the scale of manufacturing job loss right now. I

think that Doge could have had a glimmer of um of potential uh in the early days when Elon Musk um was um in charge and

VC Ramaswami was in charge as well and unfortunately um I think uh Elon focused on the wrong thing. he really tried to reduce headcount um as if payrolls was the major expenditure of the US

government rather than transfer payments or or or defense. Um and uh I think the the great shame of Elon is that I wish he could have been someone like Admiral Heyman Rickover, the father of the um

nuclear navy to build a lot of great engineering projects inside government.

rather he was um destroying a lot of civil servants lives and it didn't even seem particularly successful on his own terms after um Elon was fired as being

co-president in uh a name or so and so Doge the tariffs uh hasn't worked really well. I have a a piece coming out in the

well. I have a a piece coming out in the in the economist and and opeds to say that I think what's really unfortunate is that the US is learning um some of the worst uh lessons from China at the

moment. You know, I I dug up some of

moment. You know, I I dug up some of these old quotes that uh Donald Trump has said of Cin Ping, which he said that she is, you know, everything is nearly

perfect, brilliant, so smart. Um, and so this is like a really strange thing to say about she also said that there's no one in Hollywood quite like him as if Cin Ping is like on Tom Cruz levels of

handsomeness or something. Um, you know, just um just a very strange thing to say. I think it is unfortunate that I

say. I think it is unfortunate that I think um Donald Trump is you know visiting misfortune upon the least fortunate as uh she has done that every

policy as well as his reversal has to be defended by a vocal cadre of loyalists um and that we are turning uh intel into something like the stateowned enterprise with American characteristics and I

think um you know the unfortunate thing here is that I feel like what we're getting in the US and this is again a personal view uh speaking as a Canadian um here I feel like what we're getting is um authoritarianism without the good

stuff. Authoritarianism without the good

stuff. Authoritarianism without the good stuff of something like public order in the streets, a vast and functioning manufacturing base, um the highly functional logistics. Rather, the sort

functional logistics. Rather, the sort of things that Donald Trump is interested in building are gilded ballrooms as well as detention centers.

This is a painfully pessimistic accounting and I'm I want to perhaps push it further because I'm a glutton for punishment maybe, but it one of the prescriptions in your book and maybe we

get into prescriptions here is that or at least one of the diagnosis is that the best and brightest aren't necessarily going to DC. They're not

going to work on policy. You know,

you've got this legion of people going into who are lawyers and the smart engineers are seduced by tech. But Elon

is perhaps, depending on who you ask, one of our best modern innovators.

Certainly has had a lot of successes and he went to go work in DC. Um, and he brought a cadre of young people with him, some of whom had also had a lot of success in tech. There are certainly

some other people who are still close to the administration who work in tech. I

don't know that that's working out all that great either. And my own perspective being one of the weirdo libertarian classical liberal sorts has always been I want the brightest people

to go work in industry. Generally

speaking to the extent the United States has been really successful and has been leading it seems that it's less about they're kind of outwitting the regulatory state. They're outwitting the

regulatory state. They're outwitting the the lawyers so to speak. Is that the wrong way to think about it? Is there

something else that the these smart engineers ought to be doing when they finally get to Washington? I would love for more smart engineers uh to move into

Washington DC and actually try to run a little bit more of the government. Um

because if uh you know smart folks from Stanford or Cal or or or uh whatever sort of um you know um great school is uh not going to move into Washington DC,

you know who's going to do it? Graduates

of the Yale Law School. Um and so I uh was a fellow for two years at Yale Law and for me the really distinguishing feature of Yale law students is their raw levels of ambition. I think um Yale

law students are very smart. Um they're

very fun to speak to and their really distinguishing characteristic is how ambitious they are. And I think there's a lot of folks who treat um Yale Law, a JD from Yale Law as their ticket into

the White House. um whether that is um to be president or some sort of a staffer uh managing a lot of different things. I'm still really struck um by

things. I'm still really struck um by the Biden administration's love uh for Yale Law. Um in the Biden

Yale Law. Um in the Biden administration, some of the most senior people were graduates of Yale Law. I'm

thinking about uh national security adviser Jake Sullivan, commerce secretary Gina Ramundo, Lena Khan who ran the FTC, um Brian De who ran the um

economic council and the second to third tier level staffers were also very substantially made up of Y Law. Now I

don't feel like I need to get too partisan here, but at a first approximation, I would say that the Biden administration did not look like a great success. um and they uh did lose

great success. um and they uh did lose at the ballot box because they alienated quite a lot of people. And you know the um an unfair advantage for a lot of law students is that there's kind of a

natural uh inbuilt pipeline for a lot of law students to enter the federal government and that is through uh judiciary clerkships. If you're

judiciary clerkships. If you're graduating from law school, you know, you're probably going you might be able to um clerk for a district judge, a federal judge, a Supreme Court justice.

That is an option available to you.

There's plenty of um law student grads who who graduate out of law school and then they go work for on a campaign as a speech writer or something. And I think there is no natural inbuilt way for um

folks who graduate from Cal, folks who graduate from Stanford really to go into government. Um that option doesn't

government. Um that option doesn't really appeal to them. Um they could be working right here um for one of these AI labs to make a lot more money. I

think that there should be, you know, I I do want, you know, a degree of um, you know, regime change among our elite, our elites, you know, a degree of elite recomposition um, such that we do have a

little bit more diversity in our elites, not just um, you know, rule by Yale Law School. There's something you say

School. There's something you say actually early in the book um about the uh the tale of two housing crises um and the the kind of housing crisis that most of us are familiar with here in the United States and in California in

particular is there's not enough housing and the housing that exists is way too expensive. The housing crisis in China

expensive. The housing crisis in China on the other hand is there's way too much housing. People have overinvested

much housing. People have overinvested in housing. We have ghost cities and now

in housing. We have ghost cities and now it's all super duper cheap. Is one of those problems obviously better to have than the other?

>> Yeah, I think that it's obviously better to have cheaper and cheaper housing um than to have pricier and pricier housing. I I would love to have a um you

housing. I I would love to have a um you know housing crisis with Chinese characteristics in America in which we build a lot of ghost uh cities in which we build you know too many apartments um in which we build a little bit too much

infrastructure because otherwise um you know a a relevant comparison that I think a lot of is um the the the example of California highspeed rail which um to

me is just per se a punchline. it is per se a national humiliation and I really think that you know we ought to do something better about California highspeed rail. The year 2008 was a

highspeed rail. The year 2008 was a really important year for both China as well as um California in terms of highspeed rail. Um in the year 2008

highspeed rail. Um in the year 2008 voters in California approved a referendum to build California highspeed rail between San Francisco as well as Los Angeles. In the year 2008, China

Los Angeles. In the year 2008, China actually started construction of um highspe speed rail between its two main cities uh Beijing in the north and Shanghai in the east. Um coincidentally,

both of these lines would be about the same length once completed. I think that is where the similarities really end.

what has happened to China's uh highspeed rail um three years later they completed it um and according to the government at a cost of of about $40 billion um and according to state media

um China's highspeed rail project uh carried about 1.4 4 billion passenger trips in the first decade of its operation. How's California highspeed

operation. How's California highspeed rail doing? Um, you know, a minor

rail doing? Um, you know, a minor segment has been built in the middle of the desert. Um, the first segment is u

the desert. Um, the first segment is u meant to be completed um by the year 2030 to 2033 between the cities of Bakersfield and Merced, which are pretty

far away from um uh SF and LA. Um right

now the cost estimate is about $120 billion and I would be pretty shocked if any of us were able to take this train.

um you know three decades after the referendum uh between SF and LA and so again this is where we have like these really striking contrasts uh between the US and China they are just much more focused on production they're much more

focused on public works as well as manufacturing and California is focused on I'm not sure why >> I want to come back to the trains but to stick with the housing crisis for a minute the or the dueling kinds of

housing crisis it isn't binary though right there's there's perhaps some universe of options in What should the United States be doing given what you've talked about here and

what you've been what you've been examining? Certainly, when I've heard

examining? Certainly, when I've heard you talk about this, my suspicion before was, well, we just need to adopt a lot of these things from China, but for the most part, it seems like it's the ethos,

the aspiration to build things, but that kind of overbuilding exceptionally wasteful. um it may inspire confidence

wasteful. um it may inspire confidence and in a in the short run but all of the wealth that is destroyed along the way it doesn't seem trivial

it doesn't seem trivial and I think this is where you know we should um praise a little bit of the of the lawyerly society I think the the benefit of um

being run um by lawyers is that lawyers are a guarantor of some degree of pluralism and lawyers are a guarantor of wealth Now, here we are um you know, thinking

about things um in the Bay Area. I think

the the West Coast of America is really the only region in the world that has created several companies worth over trillions of dollars and that is a remarkable achievement. Nvidia is over

remarkable achievement. Nvidia is over $4 trillion. Um Apple is worth over

$4 trillion. Um Apple is worth over three and there's, you know, several companies that are worth over one or two as well. So, that is pretty important.

as well. So, that is pretty important.

But I think the the problem with the United States as I see it is that I think the US is a great place um the best country in the world to be a member of the super rich. If you are among the

wealthy in America, you can kind of pretty easily transmute your wealth into some degree of political influence. If

you're among the wealthy in United States, you don't really have to think um too much about the housing crisis.

You can be a billionaire in um New York City and live in one of these um super skinny skyscrapers that overlook um Central Park. Maybe you have a big house

Central Park. Maybe you have a big house in Athetherton, which is where um most of the VCs in California live. And my

view is that, you know, I think the United States cannot remain a great power if it works especially well for the rich. I think that the middle class

the rich. I think that the middle class need much better levels of housing. Um I

think that the middle class needs much better levels of transit. Um, I took a BART here actually today and you know the BART is like screechingly loud. Um,

you know, there's not much rapid service, you know, and I I just wish that there could be, you know, a smoother and slightly better BART service. New York City subway is also

service. New York City subway is also really metallically loud. You know,

there's always a giant screech whenever it comes by. And I'm sorry, I like I love trains and trains love me back. Um,

but not the American trains. And last

month I was um taking the Accela train from New York City down to uh Washington DC to speak at the abundance conference where many folks here um also attended on the Excella. You know I think it is

basically a fine train but it is a really shaky machine and I came across this headline saying that Excel is getting an upgrade. Um we're getting a new class of acceler. Um and then I actually read the article and the

article said that the new class of accelerates will be 11 minutes slower um than the present class of accelerates.

So what are we getting here? We're

getting better foam cushions. Um but at a first approximation we're moving slower and slower year by year, decade by decade and that just not does not feel like progress to >> is that symbolic or is it actually

consequential? I mean it when we talk

consequential? I mean it when we talk about you gave me the the list the honor role of billion of trillion dollar companies it it feels like

maybe that's the trains don't matter nearly as much.

>> I think that it is symbolic as well as consequential. I think that if we as a

consequential. I think that if we as a society are going to say we're going to build a better class of highspeed rail on the east coast or we're going to achieve um California highspeed rail, we

should actually built the darn thing and this thing ought to glean. And I think that, you know, there should be something about, you know, there should be some credibility with the Americans to say that, you know, we're going to achieve what we what we say we're going

to achieve. we're going to spend $120

to achieve. we're going to spend $120 billion on a train project and we're going to get the darn trains and not, you know, a middle, you know, some some sort of um, you know, stretch of concrete in the middle of the desert

because that does not project American strength to me. And I think that, you know, for the benefit of the middle class, for the benefit of the working class, they do need more housing. They

do do need more mass transit. Housing is

just this giant source of stress for too many people. And I think that, you know,

many people. And I think that, you know, it it doesn't sound good to me that Apple and Nvidia are worth as much as they do because they are also deliluding us into what actually matters. You know,

um is uh is is you know, our answer to a member a struggling member of the working class in America going to be something like, well, let them eat iPhones or um let them eat GPUs. Um I

think that is not compelling enough of a solution. Here's where I you know I you

solution. Here's where I you know I you were um you said earlier that I was um painfully pessimistic Neil and here's where I want to be a little bit more apocalyptic um

which is >> Thank you. Yes. Which is that you know what are we um going to be using um a lot of these you know technologies for generating a lot of AI slop uh right now

um you know is this really going to be good for us? um we are kind of just releasing uh these models out in the wild and yes this is kind of happening and so we just have to accept it. What I

worry about is that you know we are kind of deluding ourselves into you know thinking that these trillion dollar companies um are really worth so much because these valuations can shift quite a lot. I think a lot about this

a lot. I think a lot about this comparison between Apple um as well as Xiaomi um both are smartphone makers that make also a lot of other products.

Xiaomi makes more moderately priced smartphones. They also make a lot of

smartphones. They also make a lot of other random things like rice cookers as well. Apple is worth about $3.5

well. Apple is worth about $3.5 trillion. Xiaomi is worth about $200

trillion. Xiaomi is worth about $200 billion. And one of Apple's um tentative

billion. And one of Apple's um tentative projects was that Tim Cook decided about a decade ago um to you know explore the prospect of making something like electric vehicles. So Apple was

electric vehicles. So Apple was considering making electric vehicles.

This was nicknamed project Titan internally. Uh what has happened? Well,

internally. Uh what has happened? Well,

um, Apple gave up, um, and pulled pulled the plug a couple of years ago. Um,

Xiaomi, by contrast, um, its founder in the year 2020 vowed that it was going to make electric vehicles. The founder

publicly pledged that it was going to spend $10, he was going to spend $10 billion on this effort, that this was going to be his major great entrepreneurial venture. What happened?

entrepreneurial venture. What happened?

Um, well, four years later, Sami started shipping its cars. Um, its SUVs were so high performing that it won a major German race award. It was is called the Norberg ring. Norberg ring usually sets

Norberg ring. Norberg ring usually sets these track records by Porsche and Mercedes. And then Xiaomi with its very

Mercedes. And then Xiaomi with its very first vehicle one set a set a major speed record there. Right now Xiaomi keeps upping its targets of how many cars it expects to sell. Vehicles aren't

everything but you know you have this company that is worth 15 um times more than Xiaomi, namely Apple that said it was going to make electric vehicles and couldn't um actually manage to pull it

off. um Xiaomi was and I you know which

off. um Xiaomi was and I you know which company do you prefer? Well, I prefer the the smaller company.

>> So again, I want to return to this kind of the municipal projects, the the the need for housing. Certainly, there is a bureaucratic role in the housing crisis that we've experienced here in the

United States. Generally, it's a nimi

United States. Generally, it's a nimi problem. Um and as we were talking

problem. Um and as we were talking earlier, there there may be people who are concerned about nimbies in China, but they generally don't have any sort of political leverage. So, there isn't anything they can do about it. But that

feels like a very different problem um than the kind of marshalling the state to kind of engineer a particular outcome. I mean it also feels different

outcome. I mean it also feels different than the perhaps cultural dynamics that are at play when we talk about Apple's inability to build a car versus a Chinese company that can both build cell

phones and various other things and rice cookers and cars. wonder if you could just talk concretely about what it is that America broadly and the the

progress movement broadly perhaps should take away from what China is doing well.

And I I'll say one more thing which is that progress has to be defined in some practical way and progress almost certainly means something different in China than it means in a a western um

context. Certainly when I think about

context. Certainly when I think about progress it is a bundle of things. It's

both economic prosperity, but it's also well-being at large, which also includes all of that that bundle of civil liberties things um which are harder to maintain, harder to safeguard to the

extent they even exist in China. So

maybe you could talk a little bit about this the competing views of progress but also the practical lessons that one if they embrace what I suspect is a more

western view of progress that is actually practical and applicable here.

>> So um here is where I want to out myself as a sunny optimist for the future. Um I

am uh I know I didn't sound like that but I am um you know I I I'm ideally a Californian in my heart. I think that um something that unites both the Chinese

and Americans is that they have a sense of the future at all. You know, I spend um you know, some time in Europe. Um

Europe is um a region I describe on my very first page as a mausoleum economy which has a sense of optimism only about the past.

>> Um and I think that you know something that um unites the Chinese as well as the Americans is that they um both have a sense of the future. They have a vision of the future and they are

driving um towards the future and that is uh really really important. I think

that one of the claims I make um again in my opening pages is that Chinese and Americans are are really really alike that um you know a lot of Americans tell me when they spend time in China you know it really feels like you know

they're much more comfortable with Chinese than with Americans than with Europeans. And so you know Chinese and

Europeans. And so you know Chinese and Americans both have a sense of pragmatism. They share a sense of the

pragmatism. They share a sense of the technological sublime. They have a sense

technological sublime. They have a sense of hustle. Um they take a lot of

of hustle. Um they take a lot of shortcuts whether that's to health or to wealth. And this is where they have you

wealth. And this is where they have you know a lot of um you know hustle. This

is um you know they American people and as well as businesses they care about money. They want to make donuts. Um and

money. They want to make donuts. Um and

governments have this craving for geopolitical power which they wear sort of on their sleeves. And this is something that I don't perceive uh very obviously with um a lot of Europeans as

well as um the a lot of um Canadians.

And so, you know, um maybe roughly in closing, you know, what I would love is for, you know, Chinese and Americans to, you know, really uh recognize their natural affinities uh for each other.

They recognize that they may not necessarily going to get along all the time, but they are a culturally very similar people and they are both going to be driving progress forward in a lot

of very important ways. And um you know, what I hope is that both countries are willing to embrace progress. they're

willing to embrace um development um such that they're going to you know really change the futures together.

>> I want to ask perhaps one last question and maybe I'm pushing you back in the direction of being pessimistic, but that's only because this is what I am most concerned about when I look at America's kind of political circumstance

and try to think about its implications for progress. Broadly speaking, our

for progress. Broadly speaking, our politics have become increasingly populist and there is a real consensus about that between the left and the right. It seems that rather than

right. It seems that rather than imagining you can build more wealth, cultivate more wealth, grow the pie, most of our politics is concerned with

how to reallocate what already exists um with trying to ensure that you can have at least as easy a life as you've had and perhaps your children can have a life like that. But the notion of kind

of building something bright and big and new and gleaming doesn't always seem to be at the forefront of people's minds.

Um, is that a sense that you are you would agree is becoming perhaps more well established in the American polity

or not? Well, Camille, seems like you

or not? Well, Camille, seems like you want to drag us into uh ending on a gloomy, pessimistic, um apocalyptic note.

>> Or you can give me something hopeful >> and I'm willing to go there. I'm willing

to go there. Um so I think that yes, I am quite worried about um you know, the future mostly because you know just on this narrow issue of manufacturing if um

you know I think that China will not surpass the United States as the global superpower because the United States is also a financial superpower. It is also a cultural superpower. It is also a diplomatic superpower. And I think the

diplomatic superpower. And I think the engineering state is not able to do these sort of things very well. They'll

never become for example a financial superpower because they are so vested in capital controls that um you know is anathema to a lot of investors. But

there is one thing that China is able to do very well which is advanced manufacturing. And what I'm uh really

manufacturing. And what I'm uh really nervous of is that China gets better and better at um advanced manufacturing. The

US never really gets its act together.

Um right now the US has about 12 million manufacturing workers. Uh and could I

manufacturing workers. Uh and could I see that going down? Yeah, maybe it goes down by a few million more over the next decade um because of tariffs um poor

policies as well as direct competition um by the Chinese. And I fear that as the economy weakens with this politically important constituency that is um you know pretty important in the

especially in the Midwest, I think that if our um economy does not get stronger, our politics will also not get better.

And with that, you know, there's going to be a lot more populism perhaps um you know um tensions as well as you know possibility of greater violence. And so

I am and that is kind of the big thing that I'm very nervous of.

>> Great. And on that optimistic note, um I I want to thank you, Dan, for um sharing your perspective on things. Um I think it's fascinating.

>> Thank you very much, Camille.

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