The Network State Podcast #24—Cory Levy Interviews Balaji

Date: January 13, 2026
Main Theme:
This episode dives into the present and future of societal organization in the wake of technological and geopolitical shifts. Balaji Srinivasan and Cory Levy discuss the rationale for building “startup countries” (network states), the decline of legacy institutions in the West, talent pipelines for ambitious youth, and the emergence of alternative trust systems built on cryptography and smart contracts.

1. Building Alternatives: The Network State Vision

• Balaji’s Core Thesis: It's often easier to build new alternatives than to reform broken ones—whether in media, finance, urban space, or government (00:23).
  • "It was easier to start Netflix than reform Blockbuster, easier to start Bitcoin than reform the Fed. I believe it's easier to start a new city than to reform San Francisco, and may even be easier to start new countries than to reform America." —Balaji (00:23)
• The concept at Network School: Transforming digital communities into physical institutions, piloted in NYC and aiming for global scaling (00:23).
  • "We're taking a cloud community and we're printing it out in the physical world." —Balaji (00:58)

2. Early Outcomes: From Virtual to Vibrant

• The Network School in NYC has been running just over a year; it's vibrant, bustling, diverse—over 100 countries represented (02:09).
  • "When I arrived, it seemed to be like a bustling sort of place." —Cory (01:55)
  • "I think it feels like SF. The good parts of SF." —Balaji (02:09)

3. Denial and Sudden Decline: The West’s Traumatic Adjustment

• Diagnosing Denial: Western institutions, especially the U.S., are prone to denying decline until sudden 'digital death'—as with Biden's presidency, SVB, FTX (03:06–04:26).
  • "They deny. And then it's just digital death." —Balaji (04:24)
• The “square wave” paradigm: collapse is abrupt, not gradual (04:25).

Economic & Geopolitical Warning Signs

• Historic currency debasement: gold doubles, bitcoin quadruples versus USD in two years; true wealth is misunderstood as the dollar weakens (04:33).
• Retreat from global influence: U.S. troops withdrawing, peace with China, loss of trust in U.S. leadership (04:33–06:50).
  • "There’s been, essentially, though it's not been called this, a surrender to China." —Balaji (05:38)
• Simultaneous economic, political, and military decline across G7, with the IMF’s credibility also threatened as main contributors teeter (06:50).

4. So What?: Implications for Americans and the World

• Dollar inflation is global taxation—everyone in the USD financial system is affected (07:56).
  • Outflow from U.S. Treasuries into China, gold, and digital assets.
• The U.S. is no longer a single cohesive country, but an “economic zone” with deep ideological divides (red America vs. blue America), only papered over by the dollar. When that fails, further social and economic fragmentation ensues (09:55).
  • "Only 4% of Democrats are married to Republicans...that's not actually a country, it's an economic zone." —Balaji (11:17)
• American global standard of living faces steep decline as economic union shrinks; rising taxes, global visa restrictions, violence, and identity loss follow (12:41).

5. Historical Analogies & System Thinking

• To understand the current state: think multivariate, as in control theory—America’s state is more like the Soviet Union pre-collapse, India during Partition, or China during the Civil War (14:37).
  • "The state of many complex systems is not univariate...it's interest rate, it's unemployment rate, but it's also how many people in the country know math..." —Balaji (14:37)
  • Ethnic and political polarization reminiscent of historical splits.
  • "Reds are going to red states, and blues are going to blue states." —Balaji (15:30)

6. Opportunities for Young Talent: Don’t Get Stuck

• Encourage young, ambitious people (16–22) to travel and calibrate their worldviews:
  • "Visit Warsaw, Dubai, Riyadh, Bangalore, Singapore...and then go to Shenzhen and the number 52 city in China...you’ll see [their] higher living standards than much of the U.S." —Balaji (18:30)
• American media is insular and doesn't reflect global progress—don't be misled by the U.S.-centric narrative (20:25).
• Learn from “negative surprises” (e.g. COVID, Rome’s collapse) as well as positive ones (flight, AI) and prepare accordingly (20:50).

On Taking Action:

• "Talent calibrates by going outside the US, number one...the major opportunity for talent is be mobile, be global, and realize that there's actually advantages of being outside 20th-century regulatory spheres." —Balaji (21:59, 24:05)
  • Regulatory harmonization is breaking up, allowing for more innovation outside the West’s regulatory grip (22:23).

7. San Francisco: Cautionary Tale

• The Bay Area is vulnerable: immense technical innovation amidst profound political risk (25:30).
  • Tech is seen to profit while "putting others out of work", fostering resentment and risk of backlash: e.g., attacks on self-driving cars, CEO shootings, proposed retroactive wealth taxes (25:30–26:18).
  • The city may improve temporarily, but structural risks remain.
  • "It's like a stock that's dropped 90% and it's come up 30%...think about, you went from de Blasio to Eric Adams...then you went to Mamdani...it can get worse." —Balaji (25:29)

Political Risk > Technical Risk

• Most in SF focus on technical risk, but ignore escalating political risk against innovators and capital owners (30:01–30:28).

8. Platforms, Passports, and Practical Advice

• Choose Your Platform Wisely:
  Building on the wrong political/legal/financial “platform” is like building for BlackBerry as iOS rises (31:36).
  • "The platform in which you're building is ridiculously important...if you start with a Windows desktop app at the time that everybody's going to web apps, you just lose." —Balaji (31:36)
  • Holding USD is “minimum necessary”—instead, diversify globally, hold assets in safer havens (UAE, Singapore, Bitcoin) (33:32, 34:29).
  • Only keep in the US what you can afford to lose; “fictional reserve banking” = systemic risk (32:06–33:32).
    • "Only invest in US dollars what you can afford to lose." —Balaji (33:30)
• Second passports, digital nomad visas, and citizenship by descent are vital hedges (27:45).

9. The Next Order: Trust, Credibility, and the Code-Based Society

• Rebuilding trust means moving from legacy institutions to cryptographic, code-based systems:
  • "The Internet is to America as America was to the UK...the next rules-based order is the code-based order." —Balaji (36:38)
  • Smart contracts, Bitcoin, and blockchain-native identity offer trust via mathematics, not human intermediaries (36:38–37:15).
  • Crypto already manages trillions, hundreds of millions of people—poised to surpass traditional exchanges (37:37).
  • "With crypto we can...reboot from cloud backup. Right. So that's what we'll do, we'll reboot from cloud backup." —Balaji (38:13)

10. Personal Conviction and the Future

• Balaji remains committed to the network state project, seeing it as a decades-long or lifelong mission (38:37).
  • "This is something, in a sense, I've been working on for 10+ years...I think we need an alternative. And the same with the United States was an alternative to the wars of Europe." —Balaji (38:37)

Memorable Quotes & Timestamps

• "It's easier to start a new city than to reform San Francisco, and may even be easier to start new countries than to reform America." —Balaji (00:23)
• "They deny. And then it's just digital death." —Balaji (04:24)
• "Dollar inflation is global taxation...all these countries that buy Treasuries and they save in Treasuries if they hold US stocks...so many ways in which they're dependent upon the US financial system." —Balaji (07:56)
• "Only 4% of Democrats are married to Republicans...that's not actually a country, it's an economic zone." —Balaji (11:17)
• "The state of many complex systems is not univariate...it's interest rate, it's unemployment rate, but it's also how many people in the country know math..." —Balaji (14:36)
• "Talent calibrates by going outside the US, number one...the major opportunity for talent is be mobile, be global, and realize that there's actually advantages of being outside 20th-century regulatory spheres." —Balaji (21:59, 24:05)
• "Only invest in US dollars what you can afford to lose." —Balaji (33:30)
• "The next rules-based order is the code-based order." —Balaji (36:59)
• "With crypto we can...reboot from cloud backup." —Balaji (38:13)

Key Topics by Timestamp

• 00:23: Balaji’s philosophy on building alternatives
• 01:35 – 03:06: The Network School’s early successes; vibe and foot traffic
• 03:06 – 08:00: Denial in Western institutions, collapse patterns, discussion of Biden, FTX, SVB, dollar depreciation
• 08:00 – 14:36: Consequences for Americans; historical analogies; America as an “economic zone”
• 14:36 – 17:53: Control theory analogy; parallels to the Soviet Union, Partition of India, and modern U.S. polarization
• 17:53 – 24:21: Advice for ambitious youth; global talent pipelines; sampling the world’s “new centers”
• 24:21 – 27:45: The challenges and political risks for SF and tech talent; options for escape and hedging
• 27:45 – 31:36: Contrarian insights; importance of platform risk (regulatory, political, financial); diversification
• 31:36 – 34:15: Banking, “fictional reserve banking,” and the need for cryptocurrency and alternative destinations
• 36:15 – 38:13: Building new trust and credibility on code-based orders; the Internet as version 3.0
• 38:37 – 39:09: Balaji’s commitment to network states and vision for the future

Conclusion

This episode captures a sweeping perspective shift: that the next big leap after Google, Facebook, Bitcoin, and Ethereum may be the network state—a startup society born from the Internet but realized in the physical world. Balaji argues that as Western institutions falter, forward thinkers must build parallel alternatives: physically, socially, and economically. He urges young talent to become global, mobile, and contrarian; to rigorously evaluate and hedge regulatory and political risks; and to reimagine trust in the age of cryptographic order. Through both warning and optimism, the episode offers a compelling “state of the world” and a clear call to action for tomorrow’s builders.