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- [00:00]
Jason Calacanis
All right well david welcome to podcast i think now we're at two or four maybe three or four because i do actually i was actually on all in a while back that's right and sax and i have been friends for a while and sax sometimes quotes me and i sometimes quit sax but things your is your first visit to singapore.
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Balaji Srinivasan
No it is my first visit to.
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Jason Calacanis
Singapore what are your reactions what do.
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Balaji Srinivasan
You think i mean what was someone told me a statistic that four thousand family offices have been opened in like the last ten years or so in singapore underestimate probably yes right incredible and so i've met with a number of 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 moved through here beautiful city wonderful people amazing place so.
- [00:45]
Jason Calacanis
And it's very well run it's near everything and yes you know i don't know if you saw my tweet on this maybe you have some thoughts on this so you know london has already given up the crown to dubai and i think tokyo and hong kong the capital of capital and apac is now singapore and now maybe nyc is succeeded by miami there's like a little miami boom lit like a few years ago and now it's like that was like the that was like the gpt one.
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Balaji Srinivasan
Yeah you know before the aspirational miami is palm beach i think everyone would aspire for palm beach they might settle for miami sure sure sure yeah you.
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Jason Calacanis
Know you know the specific geography of.
- [01:16]
Balaji Srinivasan
It yeah i think palm beach is a lot like connecticut it's like where the hedge funds actually set up versus.
- [01:22]
Jason Calacanis
New york there's there's another reason for me which is that latin america with now malay is showing more energy than we thought right rather malay showed staying power you say he won in argentina right so with milan bukele 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 yes so he made a post years ago that miami is actually the singapore of latin america because if you're doing a deal between like a mexican guy and 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 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 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 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.
- [02:28]
Balaji Srinivasan
Think miami maybe has a little less of the aspirational element that you might find in other colored communities it's got a lifestyle element that probably dominates the aspirational element has been my experience 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 understand and starbase obviously is the pioneering west 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 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 re enable it but for the large part i think 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 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.
- [03:57]
Jason Calacanis
Think 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 and moreover the internet frontier where is that i call that the fractal 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 actually quite large right it may be many square miles 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 and the the thing about that is you get a sense of how many countries want something like that right here let me pull.
- [04:49]
Balaji Srinivasan
It up wow right why are there so many in the united states where is that that's where i'd like to.
- [04:55]
Jason Calacanis
That'S right so these are like what are those kinds of like this is the office of joint economic development like various offices they take an expansive view of what a zone is in this map right but certainly in central asia like china's like suffused with them right where they have you know drone zones manufacturing zones this zone that zone sorry who defines these there's a there's a group called the open zone open zone map group okay but i think that you can 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 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 and the tricky part is moving one person out at a time has been hard if you move one 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 and then we.
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Balaji Srinivasan
Could do it yeah yeah because i think everything else is the opposite yes like the absence of that environment is unfortunately gravity well yes which is very difficult to escape from 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.
- [06:17]
Jason Calacanis
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 turn is like frontier thesis that the closing of the frontier in eighteen ninety 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 the 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 of frontier closed that started trade unions and communism because it was like a steel cage match for the world everybody was boxed in yeah they couldn't go and just do their own thing yeah in nineteen ninety one with the internet the frontier reopened.
- [06:57]
Balaji Srinivasan
No i think that's possible unfortunately i think there's governing rules that exist that then you know we thought the open internet was that moment 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 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 it's well go ahead yeah no no i mean i think it's a function of like the internet became more of a a pipe than a place and the place remained the traditional governing structures so i.
- [07:47]
Jason Calacanis
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 let's say like the chinese state is definitely dominant over the chinese network but i actually do think the american network is stronger than the 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 we lost.
- [08:18]
Balaji Srinivasan
Got velocity that's right even and to.
- [08:20]
Jason Calacanis
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 right so i know that tech is going to win and we took a casualty like travis kalanick you know got you know attacked by by the journos in twenty seventeen travis did nothing wrong travis is a good man and actually he was just on all in i think recently a little while ago right yeah.
- [08:44]
Balaji Srinivasan
He'S come on a few times that's.
- [08:45]
Jason Calacanis
Great yeah 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 yeah and 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 won they couldn't stop that right.
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Balaji Srinivasan
Let me ask you this yeah 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 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.
- [09:30]
Jason Calacanis
Make it today well look at waymo look at tesla robotaxi right like those are kind of comparable uber paved the.
- [09:36]
Balaji Srinivasan
Way i mean don't you think that like things have gotten tougher to do business in these cities it's gotten much more controlled it's become less open it's.
- [09:44]
Jason Calacanis
Both at the same time right like basically they are fighting harder but net net if you net it out and you ask 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 nyt right bitcoin was stronger nyt launched all these attacks and so on and so i think the final sort of grudge match you know like the final four and like you know ncaa final four and what have you right so as we go up the brackets right like it's ccp versus btc is like the china versus internet is where it's going to be eventually right i i think what you're seeing which is true is that these state governments are getting meaner and nastier but they're also getting dumber right like for example when they're saying like millionaires and billionaires it's like saying meters and kilometers it's like a thousand x 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 does it's.
- [11:03]
Balaji Srinivasan
Like saying meters and kilometers when you're supposed to be talking about gallons and ounces yeah that besides the point that's.
- [11:09]
Jason Calacanis
Right like a billionaire is like a billionaire is completely different from a millionaire.
- [11:12]
Balaji Srinivasan
Right you're talking about cronyism versus yeah.
- [11:15]
Jason Calacanis
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 it's like take the budget of san francisco for example last i look is about thirteen you know thirteen billion plus a year so you take the supervisors plus the mayor and divide the budget into this they're basically each allocating a billion in cash per year per person yes they're political billionaires now the thing about this by the way they're actually much much much wealthier than a typical market billionaire because a market billionaire is one billion net worth over their entire life of which maybe they can liquidate ten million fifty billion right but a political billionaire is allocating a billion in cash per year so over twenty thirty years they are like ten to one hundred x the allocation of capital the degree of influence yeah that's right so the.
- [12:06]
Balaji Srinivasan
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 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 are because the individuals have the same objective yes the individuals do in any other organization which is to maximize influence that's right and.
- [12:48]
Jason Calacanis
Actually on this point i think this is really like this is a deep insight for me at least the state is their startup that's right right like for all these you know nonprofits and i was you know this is a one liner i'll probably tweet this nonprofit equals anti profit equals communists there you can get there in two steps right so for all these the nonprofits are really more like anarcho communists 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 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 a crazy kind of.
- [13:23]
Balaji Srinivasan
Thing yeah i mean i talked about it on my show but you you and i were talking about it earlier that the 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 twenty four 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 seventeen shots of vodka in a single night to a homeless person and this is like a five to ten million dollars a year program for the city of san francisco i pulled all the four hundred ninety forms for those nonprofits and tracked down where all the funding went and it's basically a network of ngo'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 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 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 yeah no and 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 measure ultimately of influence and access to assets realizes all these different 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 these organizations are these assemblies that are basically competing in an environment to try and consume capital 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 distribution that's right so that's why the state ultimately always become so big my measure is that in the united states today it's probably the case that half the population more than half the population are 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 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 consumed everything because everyone has every incentive to not have it stop growing 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 outsized influence but once it.
- [16:24]
Jason Calacanis
Crosses that threshold you're absolutely right by the way that there are some good nonprofits and 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 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 twenty twenty past like one point one billion a year cash and as a homeless population goes up is that crazy no.
- [16:59]
Balaji Srinivasan
The whole thing is just it's so obvious the more money you distribute through this network 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.
- [17:13]
Jason Calacanis
Sense that's right yeah so these guys are the feed the pigeon society in a sense i call them because 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 chain which is handing out the 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 say to snore smoke crack we can put that put that on screen rather than to they literally tell people to do 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 know 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 amount of this is like the handing out of narcan or whatever right and so what what's really happening is they are mckinsey for ms thirteen yeah right they are doing everything other than putting the needle in the addict's arm though they're putting the needle right there and they're shooing away the police and they're laying the drug dealers in and they're removing the legal consequences for it so 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 fentanyl transaction which is like ten bucks or something like that but to take a cut of the billions for fentanyl prevention because what happens is some homeless addict and really they're more addicts and mentally ill than homeless per se to not have a home is not the same as to be mentally ill or 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 they're abusing them it's like munching house syndrome by proxy right then 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 they vote to allocate more budget to the democrat drug dealers that are causing the homeless problem this is.
- [19:16]
Balaji Srinivasan
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 mal intended 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 from my perspective i would trace this back to the new deal in the united states sure sure sure absolutely which i think was the turning point for the united states which i think we should talk about but so they raise their hand and they say more not less 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 mamdani 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 absolutely and then the problem gets 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 repeated kind of statement in this country in the united states that we can do more to give you more mister 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 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 health care 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 one hundred thirty to two hundred if i become a manager and hire four people fast forward thirty years ten percent of staff as administrators to sixty percent of staff as administrators tuition goes from thirty to sixty k and that's because the federal government has unrestricted underwriting 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 and then the same happened in the federal home loan program which caused housing bubbles and then the same happened in health care because of medicare medicaid and the cost of drugs is largely driven because of the 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 literally fuels the fire and you're pouring gasoline on the fire and we get to this moment.
- [22:19]
Jason Calacanis
That we're in today that's right with that said i want to so there's like three or four things or all good things i want to kind of so there's mudani and the momdani machine there is the there's the housing education healthcare piece which is kind of and then there's the new deal so go in those layers right so on the mamdani machine point like what i think a very important distinction that we see in communism but that's also helpful in america and so you know soviet custom 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 and 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 mamdani 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 seventeen percent of the city or something like that they will raise taxes pull in top line revenue and the political billionaires will allocate it to the nonprofits who are actual clientele these nonprofits are basically essentially they're government employed activists indirectly they get a budget from the state even if they are not dot gov addresses to call them an ngo you have to actually 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 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 for the problem to cause more of the problem and the thing about the intentions by the way i will push back a little bit on that actually a lot in some ways because they're 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.
- [24:18]
Balaji Srinivasan
Needle'S gonna miss the kpi's because of my uncontrollable circumstance but if their ngo.
- [24:23]
Jason Calacanis
Budget went down now they're on it like a hawk right so if they and the way i put it is if they're so woke why are they so rich right if this was truly something that was for the good the people blah blah set their budgets to completely zero right defund the ngo's in fact even defund the police was fund the ngo's right 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 dem scam to take money away from the functional parts of society and reallocate it towards basically blue jobs another example is a hundred billion dollar california train and all of this i actually trace back to go.
- [25:00]
Balaji Srinivasan
Ahead i love the trains yeah go.
- [25:02]
Jason Calacanis
Ahead yeah the feed the california train feed it makes clear that they always talk about jobs jobs jobs on that feedback not miles of rail right it's like the milton friedman thing about the people in china it's apocryphal but they were using shovels and he's like why aren't they using cranes to dig and they said well it's creating more jobs well why don't they use spoons then right so california took that literally and they built less than a mile of track or something ludicrous they put a photo of it right they made the mistake of putting a photo because then it was actually clear amidst all the obfuscation that it was just a giant bribe of blues but they're again their innovation is not to give a billion dollars to one person but to split that billion dollars over ten thousand people times one hundred thousand dollars a person so that each one of them basically has a make work job and they in their their political constituencies right so that kind of thing whether it's another example is the podesta three hundred seventy six billion for green stuff right once we realize like the blue business model is capture the state and then capture the money and their version of going.
- [26:04]
Balaji Srinivasan
To help 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 yes 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 yes and as long as that the answer is i will not take away that program they say great you are now 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.
- [26:45]
Jason Calacanis
And bigger that's right and i think actually one of the consequence of that.
- [26:48]
Balaji Srinivasan
Is by the way it's socialism it's government employment for everyone and we don't realize it we don't realize how much of the capital is flowing to individual what percentage of people have capital flowing.
- [26:59]
Jason Calacanis
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 on the trade war democrats were defeated on on crypto and so what that means i'm not saying good or bad or just i'm just observing what that means now is this system has true competition so all of the failures that you're talking about like the 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 on chain or in china and you know on chain 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 attack their hated enemy of the libertarian capitalist tech guy but part of it is also you know zuck's thing with intranet dot org a while 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.
- [28:22]
Balaji Srinivasan
Per child one billion others three billion others all that stuff that's right that's.
- [28:25]
Jason Calacanis
Right and you know i think one laptop for child was actually very successful in the form of the android smartphone and that's you know motivated it yeah and motivated it that's right but 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 are the conservatives people of the state are the progressives the blues people and the people of the network is tech the internet that's like us basically right and there's some overlap there nothing's ever totally clean but for us the equivalent is grow the network right that 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 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.
- [29:33]
Balaji Srinivasan
Give an opportunity to 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 think that collectivism ends up deriving tyranny in its absolute sense to have everyone in a socialist system or a communist system really a true communist system require some extraordinary controls 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 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 minimum limit you're gonna be left alone you're gonna suffer you're gonna struggle so the question then became at some point that had to break which was as more people suffer as more people struggle there's a moment when that group of people has empathy and they say we have to solve this problem and and that's where the state flips from being initially a state that is really driven by its limitations one percent income tax we're not going to do anything the state's going to stay out of your way individual rights total freedom and liberty to we have to do something the state is responsible for solving the great depression and so the new deal meant to address the problems of the great depression from an empathetic note which was hey people are suffering and there's no other solution in a free market 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 deal to building highways to building suburbs to funding home loans to funding education to funding healthcare to doing literally anything and everything that a politician could dream up to provide a better standard of living for every individual which fundamentally breaks free market forces and ultimately leaves everyone begging for the next teat to be able to just do anything which is where we kind of start to find ourselves.
- [32:27]
Jason Calacanis
Today i completely agree with the the diagnosis of where we've gotten to and certainly in the us i'll offer a few given that i'm generally sympathetic to this view let me offer not exactly counterarguments just alternate perspectives i found help okay so the first is i think of the last five hundred years from fourteen ninety two to let's say up to nineteen fifty fourteen ninety two to nineteen fifty 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 fourteen ninety two to eighteen ninety you had the americas you say 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 one 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 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 roundheads went to massachusetts the cavaliers went to virginia and then two hundred years later they had another civil war in america and now two hundred years later we're having another the cold civil war basically between the same side it's like deep cultural history right so in some sense you know people have said the american civil war is actually about the english civil war right these two types of things fight okay so but on the point about fdr there is i'll give a partial granting everything you're saying i'll give a partial qualified defense of fdr from someone who's as critical of him as you are.
- [34:22]
Balaji Srinivasan
And by the way i'm not being critical in a sense that it was the wrong decision no no i'm just highlighting at some point there's a moment where a civil society recognizes the needs of a certain percentage of the society absolutely and then they try and organize and the typical organizational model is the state to solve the problems of that particular part but the problem is once you crack that egg there's no putting it back in the shell that's right.
- [34:45]
Jason Calacanis
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 or if you include let's call it collectivist dictator you include hitler and so on and so forth so hitler stalin mao et cetera et cetera fdr was like the least bad right so he only implemented like ninety percent marginal tax rates not one hundred percent he only implemented the japanese internment camps not the gulags or the concentration camps right that's faint praise but it's true in a sense that he was like the least bad communist dictator and in fact there's this great book called gosh it was like three new deals have you seen this one okay you'll like this one it actually shows how fdr was actually enamored with mussolini and hitler and so and so forth before world war two right there's a lot of influence from both the nazi and soviet side prior and vice versa like american ideas went to germany went to you know the soviet union and so and so okay so but i would argue that the fdr thing is actually part of a broader centralization arc for example eighteen sixty five 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 seventeen seventy six actually really seventeen eighty nine you know after the american revolution less well known is something called like shays rebellion right where people essentially tried to invoke the same american revolution concept of to break free and then george washington put it down right he said actually you can't exit anymore right so there was a centralization arc not without its reversals and so on but broadly centralization up till nineteen fifty both in america and actually outside why because you had like the unification of italy by garibaldi you had the unification of germany you had the 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 just disorders of 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 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 the russian revolution the red army yeah so normally a company for example that's truly in total chaos right just can't do anything it just collapses and everybody quits right but there's some underlying logic to leftism and it's neither something that the left nor the right talks about 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 communicates vacuum too vacuum too right so it would flip country after country into communism pull them into the envelope right yeah and then turn them like into conquerors and so on and so forth right so if you think of it as like a and and it's there's a lineal 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 we know what's good right there's something there to that right and that's got a power to it because it's evangelist by contrast when you compare it to the alternative if you're just stay at home like think about in our tech companies right you know there's various people who have at various points championed 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.
- [38:34]
Balaji Srinivasan
Market there's no non linearity or yeah.
- [38:36]
Jason Calacanis
Yeah exactly and so that's actually what happened with all the places that tried to not play the big guy game all the city states got rolled up into nation states yeah that's right that's right and so like ever been to san marino i've not been okay so that's this amazing like duck billed platypus you know it's like it's like a it's like a missing link you know kind of thing like a ductile platypus it's like it's like a mammal that lays eggs a rare kind of so san marino is a rare city state that survives to the present day because garibaldi took refuge in san marino when he was unifying italy so he sort of spared it from forcible unification right so it still has its own un membership its own sovereignty that's jealously guarded through the years right and it's like this thirty thousand person thing right so it's a piece of the past that is still here so the reason i say this once we understand in my view the logic of it there's this technological centralizing force but the frontier was the alternate geographical force it was like a pressure exit valve right and so that's why lots of europeans left america left europe for the for america so they want to leave the wars of europe they want to leave the revolutions of eighteen forty eight 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 nineteen fifty i would consider that historical peak centralization you had the minimum number of political units ever like about fifty un members because you had all these giga states like the ussr and china that had just formed and obviously the usa hundreds of millions of people under one banner and it was a time where there was one telephone company and two superpowers and three tv stations and then the transistor was invented and that began a rapid decentralization arc that's occurring almost ten times as fast as the centralization arc so you go rapidly transistor and you have like cable tv and you have the personal computer and you have the internet and you have the smartphone you have cryptocurrency and you have open source ai models and zip like this we're unwinding several hundred years of centralization in several decades of decentralization and so that's why i think the western state is going to lose to the network it's just like if i track various metrics of state capacity if i track all that stuff it seems to go away let me pause there and i'll give one more argument the.
- [40:47]
Balaji Srinivasan
Western states are going to lose to.
- [40:50]
Jason Calacanis
The network yes meaning that what i mean by that is for example the s and p four hundred ninety three versus the magnificent seven all of the legacy american economy is basically being shut down and it's all going towards internet companies or the money is going towards digital asset treasuries which are like internet currencies right and you can see this like whenever anybody was giving me the bull case on america the part that was working was the internet but the internet in my view is as american as america was british yeah now like it's version three point zero do you.
- [41:25]
Balaji Srinivasan
Think that the current government the current federal government 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.
- [41:41]
Jason Calacanis
A shot i like a lot of these people i think they mean well and i really think they mean well in the sense of i don't think they're doing the profit maximizing thing and so on and so forth but i don't think it's going to work for in fact i already think it's kind of or at least put like this there may be some long term success that comes out of it but it's not going to work on the timescales that people think it's going to work and it's not going to work to save the political entity like in the sense of the ussr was a political entity that did not survive of course the land survived the people survived russia exists ukraine exists estonia exists there was essentially a national bankruptcy but if you're.
- [42:18]
Balaji Srinivasan
Right about the digital the network state there's still a demand curve that is unmet for energy production sure energy capacity which has an inherent kind of you know economic driver has an inherent kind of economic stratum there's infrastructure there's layers that need to be built and that's inevitable if what you're saying is true yes and also if what you're saying is not true it's also inevitable well i guess or or do we just stall does energy become the competitive force.
- [42:50]
Jason Calacanis
That so there's several kind of layers i think the first thing is i just start always with calibrating with numbers right and very few people who i talk to about re industrialization and so on want to really engage with like the reality of what china is right.
- [43:08]
Balaji Srinivasan
Right yeah it's two terawatts going to eight by twenty forty while the united states is one going to two if.
- [43:16]
Jason Calacanis
If if everything goes and by the.
- [43:18]
Balaji Srinivasan
Way the china two to eight they're outpacing forecast and they have several new energy technologies that didn't exist in the.
- [43:26]
Jason Calacanis
Original forecast and they don't have anti nuclear activists and they're not they're doing both nuclear and solar and america is doing neither nuclear nor solar or at.
- [43:33]
Balaji Srinivasan
Least the nuclear rollout is insane it's.
- [43:35]
Jason Calacanis
Insane right so but so energy is one piece of it but really what it is is 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 going to school they have you know basically like no crime right they have like gleaming cities and like the public infrastructure is there they don't have like graffiti and you know on the subways and stuff like.
- [44:01]
Balaji Srinivasan
This the train station looked like a spaceport yeah star wars that new video that came out of that new train station that opened up now the thing.
- [44:09]
Jason Calacanis
About this by the way is like the chinese people really suffered to get here like their last two hundred years were complete mad max so even if.
- [44:18]
Balaji Srinivasan
They got to suffer for the next decade they're okay i mean yeah they could take some hits is my point.
- [44:22]
Jason Calacanis
Yeah exactly there's people who grown up with like basically going through the cultural revolution like their boomers did not have a great nineteen sixties and nineteen seventies that was not summer of love for them right so they're just any environment.
- [44:33]
Balaji Srinivasan
They'Re in today is better than where.
- [44:34]
Jason Calacanis
They came from exactly they're kind of 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 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 ehang and all this stuff and you know when i post videos of this people will say i post this video which is like we wanted flying cars we got them with chinese characters it's kind of like you know it's a riff on the right so ehang it's basically like giant quadcopters right it's like you know how the ipads scaled up iphone yeah yeah yeah 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 does short hops and i'm like you know they're stuck within a box where they refuse to admit or when i show videos of the chinese cities i'll give you.
- [45:24]
Balaji Srinivasan
A statistic in twenty fifteen ten years ago papers published by chinese research labs in major scientific journals were about half of the united states yeah now fifty percent more than the united states yes and in every category almost life sciences and about to cross the life sciences probably this month next month that's right every category material science physics math computational.
- [45:47]
Jason Calacanis
Science they do not have the wokification of education that happened twelve years ago i think people talk about a pipeline problem i think part of the issue is something really happened to american sat scores starting around twenty thirteen or so you can see them kind of drop off like this especially among white american kids kind of just drops off and i think wokification is part of it like why now ten years later there's grads who are less there others will blame it on phones one of the things by the way that's going to be a big thing the anti tech movement in the us is going to be very big because the left is against capitalists the right isn't as fond of immigrants nowadays and the center like jonathan haidt who i like he's a smart guy jonathan haidt to some extent derek thompson other guys like this are starting to blame it all on the phones right and in fact there's even tech people who are like oh tech.
- [46:38]
Balaji Srinivasan
Is bad i mean ai is the new climate change yeah exactly right so.
- [46:41]
Jason Calacanis
Right but the issue is and actually here's i think a point which is post libertarian okay if you ooh i.
- [46:49]
Balaji Srinivasan
Like this frontier of post libertarianism so.
- [46:51]
Jason Calacanis
Which is accepting all the premise of libertarianism then say what's next right so the moderated internet like one thesis is.
- [47:00]
Balaji Srinivasan
By the way i want to come back to china but yeah okay so.
- [47:02]
Jason Calacanis
So one thesis is the unmoderated internet is a problem not internet so then the question is what does it mean for a moderate internet so china has a moderated internet right because of that there they won't have millions of people cheering an assassination or something like that they won't have drones being scripted on their soil right because they can just block an intradite at the firewall level they have this concept 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 not paying attention to 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 all the chaos of the world in many ways by this border they built and i think that is underestimated in terms of how much stability it gives them but the problem is that for the western mindset they'll immediately say well i didn't consent to that moderation and 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 thesis antithesis synthesis is consensual moderation opt in to a society because in the absence of moderation you get american anarchy in the presence of non consensual moderation you get chinese control but the third concept the internet intermediate is you opt into constraints why doesn't choice work why doesn't choice that is what it is choices yeah but i mean why is why is no water why is it.
- [48:31]
Balaji Srinivasan
The american system necessarily anarchy in the sense that like so 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 so of options.
- [48:51]
Jason Calacanis
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 g seven is all having sovereign debt crisis at the same time lots of brits have left britain so many french have left france that they're trying to pass this zuckerman exit tax where it's like oh no it's a wealth tax.
- [49:25]
Balaji Srinivasan
Like it's a wealth tax more than.
- [49:26]
Jason Calacanis
Two 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 eventually everybody's going to get superman this is when the.
- [49:39]
Balaji Srinivasan
Original feedback loop pops and the reverse.
- [49:41]
Jason Calacanis
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 or losing all their doctors and so on and they said.
- [49:55]
Balaji Srinivasan
Mom donnie going to build a new.
- [49:56]
Jason Calacanis
York wall 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 not pass they have proposed if i get it right there's there's some referendum in california where if it passes in twenty twenty six it was proposed on some date in twenty twenty five and every like you know one of two hundred billionaires who is resident in the state and they have a list right of the two hundred billionaires who's resident of the state in twenty twenty five they have to pay a five percent net worth yeah.
- [50:31]
Balaji Srinivasan
It'S called the billionaire tax i read one time tax right one time tax yeah twenty twenty six but but here's.
- [50:36]
Jason Calacanis
The thing it is designed first of all it's a it's a very bad like it's it's like this crazy ayn rand villain kind of thing for several reasons first is it's evidently passed by a referendum in twenty twenty six that's binding on twenty twenty five correct and.
- [50:51]
Balaji Srinivasan
It'S a constitutional amendment right and so.
- [50:53]
Jason Calacanis
If the price of that exit tax is set on the price of the assets in the year twenty twenty five but the value of assets drops in twenty twenty six it could be twenty thirty percent 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 two hundred offices of these guys who are running major companies include zuck and so on and so forth are asking does zuck need to i don't know what this fortune is let's say it's one hundred billion right does zuck need to sell five billion dollars 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 tax the.
- [51:45]
Balaji Srinivasan
Rich what do you mean what's the.
- [51:46]
Jason Calacanis
Problem yeah exactly we're trying to eat.
- [51:48]
Balaji Srinivasan
Rich what are you talking about doesn't bother me so i'm all for it once it hits my number then i'll pay attention okay exactly by the way.
- [51:57]
Jason Calacanis
The equip tax in the us is also set up supposedly only for the.
- [52:00]
Balaji Srinivasan
Rich for the rich one percent and it's like it'll never hit me that's right now it's like forty percent if you make sixty k a year that's.
- [52:06]
Jason Calacanis
Right and with inflation everybody becomes a millionaire and then a billionaire right exactly.
- [52:10]
Balaji Srinivasan
So this is what i was saying it's not miles and or meters and kilometers it's gallons and ounces what are we really talking about that's right so.
- [52:19]
Jason Calacanis
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 soar like this as chinese yields are going down like this right and so that means people are selling treasuries right they're buying chinese bonds they're buying gold or buying digital coin yeah yeah exactly that's right so that is the sunsetting of the of the american empire basically right and and i think.
- [52:46]
Balaji Srinivasan
That you know okay so let's be optimistic okay so so our friends yes in this administration right of which there are a lot of tech friends i.
- [52:54]
Jason Calacanis
Love these guys progressive yes working their.
- [52:56]
Balaji Srinivasan
Asses off yes optimistic optimistic and our friends in the private market okay what.
- [53:02]
Jason Calacanis
What would they do okay first what.
- [53:05]
Balaji Srinivasan
So let's say you weren't building network school network state activities and you were put in the seat and you had imperial authority okay save the american empire save the american republic okay so let's say without without a revolution where everyone's.
- [53:21]
Jason Calacanis
Like totally totally so let me give the preface that what you're asking me to do is be like gorbachev or yeltsin okay so that's to say this.
- [53:30]
Balaji Srinivasan
Administration is willing to take aggressive action.
- [53:34]
Jason Calacanis
Fine fine so take it all the.
- [53:35]
Balaji Srinivasan
Way to supreme court every single time so here's to ensure that they can.
- [53:38]
Jason Calacanis
Take the action here we go so a freedom cities right establish basically there was 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 you know a zone for biotech right for illumina for example right all of these different zones which 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 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.
- [54:24]
Balaji Srinivasan
We just saw one in akron ohio.
- [54:26]
Jason Calacanis
Great okay so let's say let's say it's texas okay so texas you you have you know university of texas and you have texas state government and you have quite a few entrepreneurs in austin and so on and you have starbase and so let's say it's a manufacturing zone okay and you know burning man where there's just absolutely nothing there right the less desirable the land is the more desirable the land is the reason is because nobody cares about no incumbency yeah there's no incumbency no you can 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 what pollution laws there are what labor laws there are you have to have some sensible.
- [55:19]
Balaji Srinivasan
Rules necessarily deregulate is critical exactly minimum necessary you're defining a mechanism but ultimately.
- [55:24]
Jason Calacanis
Deregulate yeah so the key thing is to be clear you're not going from insane bureaucracy to total anarchy instead what you're saying is clearly these laws have been abused but clearly also there is some good intent at some point behind them so therefore how do we preserve the spirit with the minimum necessary edits right and often the answer is to have it supervised by let's say texas state as opposed to the federal government simply having regulatory competition works wonders this is actually one of the secrets of the chinese system they have competition between states when the american system was working it was 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 tenth amendment right bring back competition all rights not you know reserves the federal government go back to the states right so tenth amendment activists are even more important than first or second amendment activists okay right so moreover you're not going to get resistance from the democrats on this why because they're doing the blues are doing soft secession right they've talked about this 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 tenth amendment tenth amendment and establish facts on the ground like the moment you have factories there you have buildings there you have a regulatory authority that was granted to ut and to you know local texas entrepreneurs and scientists and so on and when they have authority that supersedes out 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 ten 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 will be secure because they can be either one issue is states don't have secure borders right why because of all the illegal aliens and so on and so forth but on private property even in san francisco it is still allowed to you know for every reason you can't get a homeless drug addict out of your you know like garage like like your your door sill in a in a in a restaurant in san francisco they can be like sleeping in your door sill 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 squat because the squatting laws well there's a lot of squatting laws yeah exactly that's right so they just let the homeless squad in your garage garage they 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 sacrosanct 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 fifty one percent 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 know exactly how much they're getting if it's like because you can micro allocate like fifty bucks or what have you so you make it rain for individual texans right because if it's a billion dollars like what's the population texas it's like thirty million i think something sounds right right so one billion dollars that's actually you know that's pretty good right if it's if you're getting one 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 i mean do you.
- [59:02]
Balaji Srinivasan
Really need to suddenly job growth i mean this is the economic forces well.
- [59:06]
Jason Calacanis
Well i think you do you do is i think it is surprising to me how much people even having a hundred bucks of bitcoin gave them a rooting interest in bitcoin it's like actually crazy how much it really changed their kind of impression so if you have like everybody holding like so the freedom cities freedom cities anything else tenth amendment dereg special economic zones well and the deregulations it's more than a small thing it's actually if you no re industrialization without deregulation why because the problem is not like the difference between regulation and tax is very very important why or tariffs a tax is continuous by the.
- [59:46]
Balaji Srinivasan
Way can you pull up the chart of china's nuclear cost yes versus the.
- [59:52]
Jason Calacanis
Us nuclear cost oh yes crazy thing.
- [59:53]
Balaji Srinivasan
Yeah yes i think we should look.
- [59:54]
Jason Calacanis
At that so that shows that like.
- [59:57]
Balaji Srinivasan
Basically this gives a mitch and this this speaks to the importance of d wrek because i think ultimately the most and everyone can argue all day with that solar which is fine but put solar to the side the scalability of power production with nuclear is extraordinary if you can get absolute up cost down which china has done so they have i think four hundred nuclear reactor sites in construction right now you got to think about each one of those being one maybe one and a half gigawatts suddenly that's sixty percent of the us power production capacity being built right now in just nuclear by china yep and then you add on the gen four systems which they demonstrated two years ago which are honestly engineering marvels they're incredible this is like the graphite balls they're really in a cone yeah and it's helium gas that heats up and so there's no meltdown risk it's totally safe the graphite balls can't overheat i mean nothing about it is it's designed to be stable it's designed to have like everything breaks no one's around nothing happens and the efficiency to build it is like if you look at the raw material cost it's nothing like it's so little and then obviously they just put their first thorium molten salt reactor into production into turn the power on this week oh sorry yeah so and they have insane like reserves in thorium right like ten thousand years one hundred thousand or ten million years whatever the number.
- [61:19]
Jason Calacanis
Is it's insane there's a saudi arabia.
- [61:21]
Balaji Srinivasan
Thorium and they found a load in china so anyway so the point is like because they've enabled and unleashed this shows it's physically possible it's physically possible right and the raw material cost is a fraction of what you're seeing here 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 absolutely and that includes like regulatory and labor regulatory and material regulatory in sourcing environmental etcetera 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 question so now the federal government is taking action our trump administration friends are taking action to say we want to take an active role in driving these outcomes so they're putting capital into businesses capital doesn't.
- [62:14]
Jason Calacanis
Matter and here's my argument like the entire thought that this thing is capital limited is wrong and the reason it's threefold first is regulation is like a zero one as to whether something's possible or not right and you know for example like can you do your body your choice in biomedicine like can somebody take a drug or not no you have to go through this entire fda process that's multiple years that is not how benting and best developed insulin for example right did the wright brothers get faa approval before they flew no faa didn't exist right like if you actually go back and did uber get a taxicab 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 in that area and 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 in the sense i should say nothing will go wrong let me clarify that there will be risks lots of things will go wrong because just when you're pioneering things will go wrong but everybody in that zone takes those risks no plane crashes no planes no train crashes no trains yes and if there weren't any you know like large effect size 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 an example the nsf acceptable use policy.
- [63:47]
Balaji Srinivasan
You know that is acceptable use policy.
- [63:49]
Jason Calacanis
I don't know this is actually one of the most important acts of deregulation ever why here's why until nineteen ninety one or nineteen ninety nine 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 get hit by a nuke and still survive right and it was like an educational network between universities and stuff like that and there's this debate as to whether to allow commercial traffic and they said no if we allow commercial traffic there'll be malware and spams and scams and porn and so on and so forth and of course they were right they did get all that but basically with the fall of communism also was the rise of internet capitalism in that year in that period you had the repeal of the acceptable use policy and the legalization of commercial internet traffic which began the dot com era yeah right which led to the last thirty something years so that's a great example of a zero one 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 deng xiaoping you'd get executed for practicing capitalism right so all the focus on tariffs and taxes the reason i think that's wrong in my view tariff taxes capital is wrong because that's just a percentage like if i'm selling a widget for one hundred bucks maybe lower taxes it goes from a ten percent to five percent that's an optimization on the margin or even a tariff okay maybe i get a little bit more of the market and i get a ten percent bump in my revenue maybe if all goes and that tariff has to be there for a long time and so on right so tariffs and taxes and even capital the problem is the cost of building things in the us as this graph shows the lot where things go it's not like ten percent more than china it's like one hundred x more than china it's one hundred x lower than china the reason for all that is all kinds of labyrinthine processes in bureaucracy that you just have to be able to scrap totally and look at exactly how just another part about it is and this is the hardest part honestly humility like in the sense of china is better in many ways in the physical world 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 actually in many ways the last ten years we're implicitly about copying china you know why the democrats tried to implying censorship and so on and so forth the republicans have tried to implement industrialization both have been obsessed with taiwan in many ways it's sort of like 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.
- [66:31]
Balaji Srinivasan
A lot is china wants to beat or destroy america i don't think that's.
- [66:40]
Jason Calacanis
True what i think but but let me give it macro on why people think it's true right so the v one is essentially people thinking that china is still maoist right maoist maoism was a particularly insane variety of communism it was like psycho even relative to marxist leninism right this was like the agrarian eat your eyeballs most psycho version of communism communism it led to the cambodia kill everybody with glasses kind of stuff or whatever right and then when deng xiaoping took over in nineteen seventy eight he actually it was basically a coup okay because mao's wife and the gang of four and mao's inherited successor he basically put them on trial right because it was similar culturally the end of the cultural revolution was similar to the end of wokeness everybody was just tired of ten years of absolute chaos and pandemonium and they're like let's just make money right like cap you know we've done this communism thing forever the issue is this neither the communists nor the far left or the leftists in america nor the american right wants to admit that was a coup you know why why because the communist party in china wants to say the communist party has continuously reigned over china they don't want to say deng xiaoping was a coup okay the american leftists want to say china is still communist because they're taken in by words and symbols right so they just see the hammer and sickle they're like they must be communist yay comrade right so they want to claim them as their guys right and the american right wants to you know they only see the thing communist and they're like you know these are you know they've been inculcated to think the label is always the same thing as what it says right in many ways china is nationalist but they call it communist one way of seeing that very clearly mao had this whole campaign against the four olds right like among other things like filial piety like all the pillars of traditional chinese society you were supposed to smash them and so on and so forth and xi is all about the great rejuvenation of the chinese nation five thousand years of chinese tradition and so on and so forth you're supposed to exalt this is essentially without saying it he is the this is the new chinese emperor right right and so they still keep the label communism actually you know on a website we can do a front end change or we can do a back end change right a front end change is very visible to everybody a back end change you keep the front end but the back end is completely change china did a back end change intentionally so that when you swap from you know some weird thing over here to django to rust you don't have to change the website at all it can be completely it just everything just speeds up and moves faster yeah so i think the issue with this is that because the communists the democrats and the republicans all for different reasons want to maintain that china is still maoist right it is very hard for people to see clearly that that was actually a total disjunction in chinese history this is also you know some of the naive things people say is like oh the chinese think in centuries they definitely don't right like the last hundred years was total chaos in china right chinese people are human just like anybody else but once it got really great leadership in the form of dengue who basically set up the current system they just went on this complete explosion it's actually crazy by the way because he was like seventy eight years old when he took over in his own way you know trump is very energetic late in life like for deng to be able to run china and do a turnaround of china from what it was from seventy eight to ninety two is actually crazy pretty crazy crazy right yeah but coming back up so so that's that's my the reason i.
- [70:12]
Balaji Srinivasan
So what's the motivation what's the motivation.
- [70:13]
Jason Calacanis
Today what's the motivation today for ccp is sitting what's their motivation right so.
- [70:16]
Balaji Srinivasan
They'Ve got their five year plan plan yeah they what are what do what is the west what is the american.
- [70:26]
Jason Calacanis
Left and right where are they getting.
- [70:27]
Balaji Srinivasan
Wrong about have right and wrong about the mindset of china and you know the the so the the the the the thucydides trap question yes like how much do we really have a trap.
- [70:40]
Jason Calacanis
And it's a great all this is.
- [70:42]
Balaji Srinivasan
Great you know and how much of this is illusory yes okay great so.
- [70:46]
Jason Calacanis
There'S a guy in asia times named han fei z who i find a very insightful writer he's a little bit of a troll but he's actually very numerical in a way that's unusual among western columnists 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 data 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.
- [71:16]
Balaji Srinivasan
Both but give me the empiricism i'll.
- [71:18]
Jason Calacanis
Tell the story yeah exactly that's right so han fei z in asia times had a good concept a while back like a few months ago which is basically that and it kind of complements 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 obviated the thucydides trap by just rapid execution and it's now cranking like three hundred x the number of ships the us has it's got so many ships so many planes and.
- [71:46]
Balaji Srinivasan
So like this it's adding five terawatts of power when we're adding one exactly.
- [71:51]
Jason Calacanis
Yeah that's right and it's accelerating it's accelerating right so you only have a war when both sides think they're going to win right and hegseth for example is actually quite a smart guy so on the sean ryan podcast last year he showed he was aware that chinese hypersonics could sink every us aircraft carrier in the first twenty minutes right and other people have said similar things like the pentagon govini study showed that the tomahawks and jdams are made in china.
- [72:19]
Balaji Srinivasan
There is no war with china there.
- [72:20]
Jason Calacanis
Is no war with china it's basically all fake all the military spending is basically you know the raytheon co said you can't decouple from china the secretary of the navy said china's one shipyard makes more than all american shipyards combined i mean the entire concept of there being a military economy that's distinct from the consumer economy comes from hollywood movies but it's wrong right the military economy is a subset of the consumer economy 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 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.
- [72:56]
Balaji Srinivasan
I mean what i hear is they'll be allowed to publish papers and i see this in science because i track a bunch of different disciplines but like they're always publishing right before us right and then they don't publish beyond that there were some papers that were published that were they were very far ahead i won't mention what they were i.
- [73:15]
Jason Calacanis
Think and they stopped publishing and they stopped publishing yeah yeah probably and so.
- [73:18]
Balaji Srinivasan
They get turned off so basically it sound what i heard was like you know the party saw party leadership saw that they were getting too far ahead whoever is monitoring this said you're publishing too far ahead you have to stop publishing yeah so because the individual actually smart 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 individually recognized for their work they are prideful scientists they they want to have an impact on humanity in the granite scheme and they don't just think about the united states i think about the world and as a result they want to put stuff out there however the risk is tipping the united states off on how far ahead they are in some disciplines which is rather substantive yes that's.
- [73:57]
Jason Calacanis
Right and basically i mean that is the trade off in china the collective does take precedence over the individual and there's a leftist version of that which is bad but there's a nationalist version of that which is at least arguably good in the sense of i think let's say up until you get to the ninetieth percentile china is a good life for most chinese people however once you get to the ninetieth or ninety ninth percentile now you're surveilled and tracked and so on so china is the best for the most but the internet is the most for the best yeah right so they say once you get really good you're jack ma or you're somebody like that then you need to get out of china or you need to be like yes or no sir three bags full sir on everything the party says and does right so it's a it's an interesting kind of trade off where 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 whatever you want everything is there and 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 you can't do is you can't like organize groups like like to block a bridge for example like they do in the us or to you know throw stones and so on and so forth and the party actually takes all of that feedback and they use it to try to like if they see a lot of anger on something they might censor it but they take that as feedback and they use that to try to like cut it off later right i'm not saying they're good i'm just saying they're very effective at what they do and but i want to i want to address one of your other problems i just want.
- [75:36]
Balaji Srinivasan
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 well versus we just need to be self.
- [75:46]
Jason Calacanis
Stable i think that in twenty twenty five 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 coming to this from ten plus years what i do is i read russian news in translation i read indian news i read chinese news in translation because i feel that that gives me more signal than just reading wsj new york times right so in fact i don't even like x plus weibo which is like chinese twitter and a few other things you start to actually get a map of the world where you're seeing lots of events by the way that other people aren't even talking about right okay fine so here's my rough narrative of how china sees it 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 thirty seven years from nineteen seventy eight to twenty fifteen china grinded in factories while americans were watching friends in the nineties 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 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 grind grinded for for generations right decades and then the they kept executing a huge break for them was after two thousand one with nine eleven 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 in iraq and all that crazy stuff right and then only by twenty fifteen so there was a critical moment there's an important graph important paragraph so we can show you here this was us media revenue and they were doing great and then democrats which is basically media it's a big part of it was they were disrupted by the rise of the internet facebook right and so this happened right after the financial crisis and so we just i mean a seventy five percent ish drop in like just a few years that really hurt them and they blamed us for that right okay so the internet disrupted let's call it blue america or democrats at almost exactly the same time china over here you see china rise and disrupt the republicans manufacturing right so in twenty ten basically you realize it's a forefront conflict right and this.
- [78:26]
Balaji Srinivasan
Was unlocked in the early nineties with admittance to the wto and yes and trade freed up but really but the.
- [78:33]
Jason Calacanis
Main thing about it is we have to remember also and this is not people are forgetting these parts of it china there's there's a strategy to admitting china which was 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 tiananmen 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 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 they leave it to later leadership to figure out the next competitive move right and so moreover actually in the nineties 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 g eight 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 internet is literally invisible it's intangible and china's overseas so like the cognition of these things even existing it's not like you can look around and see it happening right it's happening either overseas or in the cloud right okay so my my narrative is that the rise of china that basically disrupted republicans the rise of internet disrupted 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 yeah so that's like a more explanatory model to me of the last ten or fifteen years or so wait explain.
- [80:58]
Balaji Srinivasan
The wokeness against the republicans because what's the power structure that because the whole origin of wokeness is demolishing power structure for me it always felt like one of these emergent things not necessarily intentional.
- [81:11]
Jason Calacanis
Things oh it's very intentional this graph shows that starting in twenty thirteen all these phrases like toxic masculine yeah i've.
- [81:19]
Balaji Srinivasan
Seen this yeah these all went vertical.
- [81:22]
Jason Calacanis
In nyt in twenty thirteen right contrast to phrases like amazon right these are like control phrases where you can see them just kind of going up organically on their own right or like radios going down right these are like control phrases but you can see an editorial decision was made because the new york times stock price was down 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 reelection in twenty twelve the economy was still weak and he couldn't really say that he'd repaired the economy so that's when proto wokeness really got underway he pushed the race and gender buttons extremely hard during the campaign and that got the whole thing heated up right and a third twenty twelve reelection the twenty twelve reelection right so he pushed those buttons much harder in twenty twelve than he had in two thousand eight partly because he couldn't run fully on the economic record a third piece of it was occupy wall street was pushing on economics and and there are various central leftists who didn't want economics to be the focus there it's like okay just go and do the race and gender and so on stuff right so say these three things like the 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 sixties 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 go woke go broke but there's actually an alternative phrasing and this is i think john stokes is coinage or others go broke go woke why gone broke go woke because once you're once once these organizations were going we're so so so financially do you.
- [83:22]
Balaji Srinivasan
Think it was the organizations because it feels to me like just again there's.
- [83:26]
Jason Calacanis
A bottom of aspect of it too.
- [83:27]
Balaji Srinivasan
Yeah there's like this this economic like messiness that was happening that at that point where do you go where do you blame because you know you've got a continuing presidency yeah and so you start to recognize again maybe at the end of an empire well this idea that there's well you create synthetic power structures i mean that rationalize the circumstances that you find yourself in without actually looking at the real circumstance which is it was so insane we organized the system to suck up all the capital and inefficiently blow it everywhere and that's.
- [83:58]
Jason Calacanis
What happened the whole blm thing after eight years of a black president you know it was something where it was just it was essentially meant to be like what's the right way of putting this 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 by that yeah the civil rights movement these were its glory days yeah when we fought for a cause yeah man that was their great moment right world war two when they're fighting the nazis also a moral cause.
- [84:32]
Balaji Srinivasan
For the right i mean you always identify an oppressor the invisible but now manifest reality of the system that's broken which is the reason we can't progress because i think we're wages stagnant around that time as well well i mean.
- [84:50]
Jason Calacanis
Inflation has also been crushing wages for a long time right i mean real wages growth it really it really went the the stagnation or the the devaluation.
- [84:59]
Balaji Srinivasan
Really got that's the moment when socialism takes off which is yeah so that's and my i have a theory on this my theory is like every human needs to progress by ten percent 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 understanding of what i am what i have so that's where desire comes from and so the human only feels satisfied and happy if they're getting the things they don't have by some amount every year have you.
- [85:33]
Jason Calacanis
Ever seen this graph amazing amazing amazing.
- [85:37]
Balaji Srinivasan
Chart price of soup yeah here's why.
- [85:38]
Jason Calacanis
There'S relatively few products which are like consistent over more than one hundred years right because you know and the same manufacturers being in business they're manufacturing of.
- [85:49]
Balaji Srinivasan
Scale it tells you yeah this is.
- [85:52]
Jason Calacanis
The true chart maybe the single best chart of inflation yeah oh look we.
- [85:56]
Balaji Srinivasan
Went off the gold standard yeah exactly.
- [85:59]
Jason Calacanis
So you can see it here right there it is so this is the true devaluation of the dollar no but.
- [86:03]
Balaji Srinivasan
I so this is the underlying right so we made these decisions to grow the government grow government spending in order to give people more stuff as a result the only way to keep doing that is get off the gold standard fiat print and that's where we ended up causing stagnant wage growth stagnant purchasing power et cetera or declining purchasing power.
- [86:20]
Jason Calacanis
And second wage growth on the housing education and health care yeah those three areas if you've seen the graph that shows we can put on screen but those are three things which have soared in price correct while everything that technology.
- [86:31]
Balaji Srinivasan
Correct the technology like that doesn't have.
- [86:33]
Jason Calacanis
The government spending well that's right exactly so the things that are when the.
- [86:36]
Balaji Srinivasan
Government spends there's no market force that's right there's no choice to not buy something if it gets too expensive so as a result it naturally gets more expensive every year and the government just says okay i'll pay more i'll pay more 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 so as this happens the cost of everything goes up the purchasing power for everyone goes down and i think what makes a human happy there was a study in jonathan haidt's first book or one of his earlier books that he did called happiness hypothesis where he showed a psychosocial survey data on happiness as a function of income like at the time it improved up to sixty thousand dollars of income a year then it flatlined beyond that and then the key measure of happiness was income change year over year so the more your income changes from one year to the next the happier you are right and you can think about like you win the lottery you're thrilled that's the best year of your life next year you didn't win the lottery even though you have forty million dollars in the bank you're not as happy as you were the year you won the lottery right 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 than you had last year in purchasing power you're unhappy and that's when i think you create the construct in your mind of the system and you try and define the system that keeps us and that's where there's this opening for the oppressor oppressed narrative to start to take hold absolutely.
- [88:14]
Jason Calacanis
And i think my framing on that or my phrase is rather than first world and third world i talk about the ascending world and the descending world so the brooklyn woke is from the descending world they were born rich but they feel themselves becoming poor no and.
- [88:31]
Balaji Srinivasan
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 forty million americans graduated in the last ten years from student from college with student loan average student loan debt for forty thousand dollars so forty million americans with forty.
- [88:47]
Jason Calacanis
Thousand dollars is that right yeah well.
- [88:49]
Balaji Srinivasan
Yeah that might be a median number but it's a pretty substantive number and so forty million four million a year ten 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 from a middle class family where they had positive assets the parents owned the house now the kids that voted for mamdani 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.
- [89:32]
Jason Calacanis
Win that's right and i think basically the issue with this is it is you know there's a graph that i think americans pull back from values yes right exactly religion children only thing that's up is money which is very individualist.
- [89:47]
Balaji Srinivasan
Right yeah by the way this is all linked to progress like that ten percent improvement in life every year as i meant like the more you can because as soon as you don't have that all the values that you held true you no longer believe in rule.
- [90:02]
Jason Calacanis
Got you here what use was the rule that's right okay so this graph has three different charts this is showing the yield spikes in the us germany japan uk italy france at the same time this is showing yield dropping in china but this one is one which shows that the blue american and red american are genuinely descending world but they're not calibrated on why 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 parity across the eurasian supercontinent okay and that's why marco polo sought out china that's why columbus risked his life to get to india that's why the mongols and the huns at various times could defeat europeans that's why you know like the the you know spain was taken by you know folks in the middle east and so on and so forth right and so this is something where it wasn't that europe was completely dominant they were they were one major power and they weren't unified at all times obviously right okay so with the advent of the industrial revolution europeans got so far ahead that the world economy rocketed out there and then with nineteen thirteen nineteen forty they blew each other up with world war one and world war two with all these new gizmos they had and when the dust settled everybody else had been they were under socialism they're under communism japan had been nuked eastern europe was in ruins the entire european continent was just bomb shells everything flying right and the us was basically unscathed relatively and so the world economy was essentially balanced between north america and western europe right 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 war order this is treated as the year zero nineteen forty five 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 must 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 but they're not calibrated on is that the you know chinese guy or the polish guy who is just as smart or smarter or hardworking was artificially being restricted from the global market by communism by you know various ideologies right okay once the cold war ended in nineteen ninety one you see the rubber bands snap back to asia very very fast because china is no longer communist eastern europe's no longer communist india is no longer socialist it's liberalized russia is no longer communist not to the same extent southeast asia is liberalized et cetera et cetera everybody is now actually competing on the global stage and for a while this seems to be a win win for everybody and in many ways it is but the problem is that this is a huge shift in relative power and here's where the problem starts dollar inflation because is global taxation because when the us is printing a dollar it is distributing that inflation across billions of people not just three hundred million americans 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 whereas if they were if america was just exporting chocolates or even cars it could have a gradual decline to number two instead it has to fight like heck to be number one and this is actually the underlying logic of you know like any company if you're not growing you're dying right so the american empire has to from like kind of the meta logic you know an ant doesn't have intelligence but an ant colony does right the empire has to start a fight with russia start a fight with china you 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 thucydides trap 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 prigozhin 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 down moreover the the to the 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 and they slug it out and the russians are basically winning otherwise there wouldn't 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 industrially and so the issue here is that that means you have a descending world like the blue american red american who are calibrated on being all time high your lottery winning kind of thing right they're calibrated on nineteen fifty but you can only go down from there right and so so because of that that's like this you know we start to understand the perspective of the russian after the end of the cold war right right they just felt this huge psychic loss in status and many of them discovered new identities this is the biggest thing by the way 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 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 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 on so forth they drank and drugged themselves you know right and there are all kinds of crazy wars after the soviet union ended and so that question is what's being litigated right now today on on x at ever increasing volume of like who is an american is like who is a soviet yes it's like a constructed software category and it's even more artificial than the soviet category because soviets you could at least come back to russian and russians were fifty that's in our piece you know the ethnic piece at 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 is that in nineteen eighty nine there's a survey that showed that the russian ethnic group had gone down to fifty one percent 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're the ones who bled the most you know and we're paying for the union so both parties felt oppressed by the other yeltsin was on the side of russian nationalism estonians instead of estonian nationalism poles you know like everybody was in for their own tribal nationalism the whole thing came apart this is what's happening in america now where double digit percentages of the population some percentage of people hate white people some hate men some are mad at jewish people some are mad at indians some are mad at you know 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 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 i think what's going to happen after the dollar ends is the democrats are going to side with chinese communists and the republicans are going to become bitcoin maximalists and that's what i think it comes next but i think one other piece i'll say a very big thing that is going to become a thing in the future is people are going to be mad at those who leave they're going to say something like stay and fight you coward right but the issue with this is you know i'll give a one liner response and more because calacanis and i jason and i have kind of talked about this like did the irish americans betray ireland by leaving ireland should they have stayed in ireland there's actually more people of irish descent outside ireland right they didn't really betray ireland what would that even mean the potato famine other things things were breaking down but obviously some irish stayed back why didn't they stay back right and the actual answer was those people at that place in that time did not feel that they actually were empowered to cause anything positive politically there so they left the puritans who came to massachusetts the massachusetts bay colony they left right because they felt you know what let me make a better life abroad right the germans who came from the revolutions of eighteen forty eight they felt better life abroad and then more recently obviously jews coming from the holocaust you have the persians who fled the you know iranian revolution yeah chinese and koreans and vietnamese who fled communism indians were really oppressed by socialism and indira gandhi and emergency and so on so for this stories that americans don't necessarily know and obviously they're all the dysfunctional governments in latin america and south america like you know castro and that story that many americans do know but 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're pretty good at math and they've got a great civilization at various times in history but they were hit by this mind virus of communism their size melted down and many of their best left and many others were stuck and the ones who were stuck were mad at those who left but stay and fight what exactly does it mean because stay and fight who oh stay and fight another american for america that's what they mean by it stay and fight with whom because a lot of them are also saying tech guy get out they're saying you know like indians we don't want you anymore or whatever right so we don't want you there yeah tech guy.
- [99:52]
Balaji Srinivasan
If you over contribute i'm going to.
- [99:55]
Jason Calacanis
Penalize you yeah exactly that's right so on the one hand they'll be mad for you for leaving the other hand they're literally putting a thing saying tech guy get out right then stand fight 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 see and fight how yeah well because staying actually is surrendering why because if you stay in california you're subsidizing it yeah right yeah and so leaving is actually fighting right so anyway so that's how i how i think 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.
- [100:33]
Balaji Srinivasan
On yeah well i'm sure people in the administration will listen okay and try great i do think it's important to try and i do think like look i mean america was designed to have mechanisms of self correction 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 but i do think that there's a significant will and i do believe deeply in the notion of agency but it requires collective agency and there's collective forces that have very disparate views on what their agency is intending to do and that may ultimately lead to not being able to get out of the cycle fundamentally but i will.
- [101:23]
Jason Calacanis
Say this there's a lot of amazing americans there's a lot of amazing strength in the american spirit and a big part of that is being able to reboot from scratch 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 scratch yeah.
- [101:40]
Balaji Srinivasan
I just don't know if the average if the majority of americans feel that.
- [101:44]
Jason Calacanis
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 that's often portrayed as oh my god it's for the rich it's not for the rich it's actually something where it's for the builders that's right okay great.
- [102:01]
Balaji Srinivasan
Thanks for having me it's been great to visit boom and congrats on everything you've built.