All-In with Chamath, Jason, Sacks & Friedberg - E94: NFT volume plummets, California's overreach, FBI meddling, climate change & national security

Alright, everybody, welcome to episode 94 of all in. This is a

summer unprepared episode. There’s not much news. We’re

gonna wing it with me again. In his golfing cap. The rain man

himself. David Sachs, you do okay, buddy? Yeah, that’s good.

Yeah. All right. I’m kind of annoyed that we’re taping on a

Wednesday. Yeah, this is a slow news week. It’s a slow news.

Well, that’s not why we’re taping on a Wednesday is because

you have to want to go to Burning Man. Well, whatever. I

mean, listen, everybody has to get their burnout. Sachs, have

you ever been to Burning Man? Yeah, I’ve been before. Burning

Man. Really? He was there on threesome Thursday. I’ve been a

couple of times. I think it’s, it’s a cool experience doing

worth doing, you know, once or twice in your life. It’s not

something I want to do every year. But I know a lot of people

do like doing it every year. They’re like really into it. I’m

not really into it that way. But I think it was a worthwhile

experience to go at least once. Jamal, have you been? No,

Freiburg. Have you been? I’ve not been. No, I have no desire.

No, I don’t like driving in the car for a long period of time.

And well, by the way, I’ll tell you, I’ll tell you why I don’t

really have a huge desire to go. I, I don’t really have a huge

desire at this point in my life. To want to do a ton of drugs.

That’s not that’s not just about that. Really? No, really.

What it’s really about is are we joking right now? It’s if you

like art and you like music, it’s amazing. It’s amazing. I

really I really like art. I think I actually collect

phenomenal art. In fact, I like to go to like freeze the

biennale. It would blow your mind. No, no, no, you have no

idea the scale of the art there is tremendous. It is

extraordinary. And if you’re into music, we just can we just

call it what it is. It started out as a festival that did

celebrate art and creativity. Yeah. And over time became mass

market. And in order to become mass market, there is still an

element of that. But it’s a huge party. And I think people

should just be more honest that it’s super fun. You can really

rage for a weekend or for an entire week. And people should

enjoy themselves. But let’s not like have to put all these

labels about how like intellectually superior it is and

how you feel like bullshit. I don’t think it’s really it’s

okay. It’s okay to go and do drugs. The thing that’s

interesting about it is it’s really about community, a large

number of people get together, they build camps to do drugs.

No community. No, you’ve never been you would. Literally,

that’s not the vibe there. The vibe is really dancing and

creativity and art and community. But anyway, so it’s

like a rave. It’s right here. Everybody’s on drugs. I mean,

sure. I mean, with neon with a lot of neon. No, it’s, it’s

might be those experiences are the best when you’re sober.

Best best. You have to understand the grace going to

EDC sober. I’ve never been to EDC. But this there’s a great

filter here, which is, you’ve got to drive six, seven hours

into the desert. And you have to survive, you have to bring

everything with you and bring everything out, you know,

whatever it is a bathroom, water, food, and it is harsh. I

mean, it’s 100 plus degrees in the day, and it’s 40 degrees at

night. It’s not easy to survive. It’s hard. It used to

be that way. When I went on when I went, I went with a bunch

of guys who had the whole thing like wired in and they had like

these yurts and it was like a whole community and they had

like running water and a kitchen and it was basically

glamping. It was glamping. There are people that hard to

survive. No, there. I mean, it’s hard to do that. There are

people who glamp. It is hard to do that because you have to

have to go with people. You have to go with people who know

what they’re doing and are highly organized. So yes, they

take months to set that up. So yes, they spent the whole year

whatever setting it up and it was really elaborate. And then

there was an article like in the New York Times basically

saying that, you know, that they were ruining Burning Man.

Yeah, because they were making it too nice.

That was part of the problem. You remember this? That’s when I

went, I went to the too nice experience. So they wrote that

about you. Yeah, basically. Great. You ruined Burning Man.

Great. Thanks. Thanks for ruining Burning Man.

I don’t know if you’ve been following the NFT story. We’ll

queue that up as our next story. OpenSea, the marketplace, the

eBay of NFTs, if you will, the volume has dropped 99% since

May 1 peak of $406 million in a single day. On August 28, volume

dropped to around $5 million down 99% according to

decentralized app tracker DAP radar. On a monthly basis,

OpenSea’s volume has dropped 90% according to Dune analytics,

the floor price of a board ape has now dropped by 53%. If you

remember, OpenSea raised 300 million at a $13.3 billion

valuation December 2021 in a round led by KOTU and Paradigm.

To put that in perspective, that was nine whole months ago.

My how the world has changed.

February, what’s your take on NFTs? And this whole boondoggle?

I don’t know how to how we look back on it. Yeah, I don’t know.

I mean, we’ve had a lot of bubbles as a species. This is

just another one.

I thought we’re gonna stop doing stock market crashing

stories. Well, this is different. This is a different

market. What do you think? Did you invest in a month of this

story, which is fill in the blank asset class crashed? Yeah.

This one scene, the question I have here, saxes, do you think

that this is the end of the category, though? Do you think

there’s a category ending? Do you think there was ever

anything interesting here? Because you took you heard a lot

of pitches like I did, for how NFTs we’re going to change

everything, not

I’ll say something, because I liken this to the point. Just to

tie it back to what we just talked about. At the end of the

day. You know, I think I’ve said this in the past, but like

what differentiates humans from all other species on Earth is

our ability to tell to communicate and tell stories, a

story is like a narrative about something that doesn’t exist.

And by telling that narrative, you can create collective

belief in something. And then that collective belief drives

behavioral change and action in the world, right? I mean,

everything from religion, to government, to money, to art is

all kind of driven, all markets are driven by this notion of

narrative and collective belief that arises from that

narrative. So when you go to an art dealer, and you have a sit

down with an art dealer, you might appreciate the art, but

then the narrative begins. And the narrative is this artist did

this, and they came from this and the artist that looks like

this traded at 6.8 million. And this artist is only trading for

3.2 million. And the whole narrative takes you away into

Okay, I should pay 3.2 million for this piece of art. And

ultimately, it’ll be worth more. And that’s the fundamental

premise of markets is you’re buying into something not

necessarily always, and this is such a minority. Now, it’s scary

used to be that you don’t a piece of a business, or

productive asset, you pull cash out of it, hopefully, you get

more cash out than you put in when you buy it. Nowadays,

markets allow you to trade. Therefore, the majority of

market based decisions are driven by if I buy something for

x, I’m going to be able to sell it to someone else for y. And so

the narrative is driven around, I’m paying this, someone else

will pay y down the road, I’ll make money from that. And this

has been repeated 1000 times over, it’s been repeated in the

ICO tokens, it’s been repeated in the tulip bubble, it’s been

repeated in every art market and subsidiary of every art

market since the dawn of time, since the dawn of markets. And I

think the NF T’s are really just one more kind of example where

this beautiful narrative is formed the digitization of art,

but it is no different than any other form of assets that we

tell ourselves a story around. And we convince ourselves that

I’m paying something today, and someone else will pay something

more for me tomorrow. And I will also say that in the last year,

with the liquidity that we saw the last two years, it leached

into the stock market, where there’s supposed to be more

rational behavior that ultimately the cash flows of an

asset you’re buying should generate more for you than the

money you’re spending to buy that that asset. And ultimately,

you can maybe trade out of it early. But still, so much of it

became about well, the stock is going up. Therefore, if I spend

x, someone else will spend y and I’ll make money on the stock

with no underlying assertion of what’s the productivity of that

business? What’s the return on cash going to be based on the

cash flows coming out of that business over time, or any of

the fundamentals around it. And so so much of our discussion

and distortion has really been driven by this narrative

fueling. And I think the NF T’s are an example, but there are

many others. And we’re going to see many more as long as humans

have the ability to communicate with each other.

Any you have any take on it? Your mouth?

I think freeberg’s mostly right. Like, I do think that there’s

this thing, the the Burning Man Coachella example, is the best

way to describe this. A lot of these things are the same. But

when a few people approach something early, they’re too

insecure to admit that it’s the same as something else. And so

they spend a lot of time trying to tell you a narrative about

why it’s totally different. The Buffett example, you know, would

be the quote, you know, when somebody tells you that this

time is different, it’s probably not that different. Or

the other quote that’s well worn in history is like, you

know, things don’t necessarily repeat in history, but they

rhyme. All of this is trying to say that other than like

fundamental leaps of science, there’s not a lot of stuff

that’s new in the world. You know, we are repeating things

over and over. And one of the things we repeat is the social

capital that you get from having certain choices, and then

getting other people to validate those choices, because

you want to feel like you’re, you know, worthwhile. And this

happened in NF T’s. And I’m sure in the first phase of

different movements in art. That also happened. It’s

probably happened in a bunch of other markets as well. So

these things are more similar than they are different.

Coachella and Burning Man, the same NF T’s and part of the art

market, the same, everybody that runs to you with why it’s so

different. I would just have a grain of salt and say you don’t

need to be different. Just enjoy it because you think it’s

cool. All right, we can go either to this California fast

food wages story. Or we can go to Goldman Sachs workers are

quitting on mass because Goldman Sachs is saying you got

to come back to the office five days a week. Where do you want

to go boys? I think the California thing is really

interesting. Just the three things that California did in

the last week. I don’t know if you guys saw but number one is

they basically said that you know, you have they’re going to

ban ice combustion engines, I think by 2035. So you have to be

battery EV. And they have new sales, you can still have a new

sale. Sorry. Yeah, new sales, which is the first in the

country to do it. And just to go back to a second, California

is the largest auto market in the United States. And

effectively, you know, Trump in California got into a huge spat,

because California had certain emission standards that were

tougher than the rest of the United States. And, you know,

the federal government tried to sue California and back and

forth all of this rigmarole. So California is always sort of led

on climate. That was one thing. Then the second thing is they

said, we’re going to create, you know, a state sponsored

organization to set the minimum wage rates for fast food

workers. Pause what we think about that. And then the third

thing is that this Congresswoman, I think, or this

assemblyperson, Buffy Wicks, passed a law through the Senate

and through the house that essentially holds social media

companies liable for the mental well being and the mental health

of kids. And depending on where you’re lying on all these

issues, it’s like an interesting kind of lens in

which we’re like California is really becoming extremely,

extremely legislatively active and basically info imposing

their will on free markets in the economy there.

Yeah. And for people who don’t know the fat, the fast food

issue was, they want to move to a more European style where

instead of unions, debating with individual corporations,

McDonald’s, Burger King, whoever, what they’re going to

pay their employees, or employees having that

discussion one on one, they want the state, some state

authority to pick the amount per hour, fast food, companies

pay, and then I guess disintermediate the unions. It’s

kind of confusing. But interestingly, our friend,

Lorena Gonzalez, if you remember, she’s the one who told

Ilan to, you know, f off. And was a former democratic

legislator. She introduced the bill when she was in the

assembly. And so it’s kind of a weird approach. I’m not sure

why the government

No, it’s not. It’s not. It’s not disintermediating the unions.

She Lorena Gonzalez, Fletcher, I guess now she’s the former

democratic legislature who drove Ilan out of the state. Remember

when she said, you know, f Ilan,

she works message received?

Yes. And he left. Great, great move for for the state. So she

is now running one of the biggest unions. And what she

said is that this bill will move California closer to the labor

model used in Europe, where unions negotiate, the unions are

still negotiating for wages and work conditions, but in an

entire sector with some sort of government board, rather than

company by company. So in other words, it’s too slow to

unionize, you know, company by company, they would just want to

unionize entire sectors of the economy. Now, the thing that’s

really crazy about this minimum wage proposal is that, like you

said, Jason, it isn’t just that they set a minimum wage, they

created a 10 person panel. So there’s a new government agency

that’s going to regulate fast food, the fast food industry,

you know, they’re not going to stop a minimum wage, it’s gonna

be work conditions. So now you’re turning fast food

restaurants into a highly regulated part of the economy.

And the weird thing is, it’s not even just all fast food, it’s

basically chains that have more than 100 fast food restaurants

nationally. So in other words, if you’re a local operator of

two McDonald’s, you’d be subject to this 10 person board. But if

you own 20 restaurants that aren’t part of a national chain

in California, then you’re not. And so the weird thing is that

some workers in the fast food industry could get this new

minimum wage of $22, where other as other workers who work for,

you know, they’re not part of a major chain would get the

statewide minimum wage at 15. So it’s, it’s, it’s kind of

unfair in that some parts of the restaurant industry are being

regulated and others aren’t.

Is there any justification here that you can think of to not let

the free market do its thing, Friedberg?

Well, if you represent the workers, you’re saying, hey, pay

them $22. And you can. And here’s what that points out. It

actually points out that there’s probably a pretty big business

flaw in a business that’s so reliant on commodity labor. And

that business in and of itself is not as valuable as you might

have thought it was before. Think about it this way. There’s

a company called McDonald’s. And then there’s another company

And then there’s another company called McDonald’s labor. And

what happened before is McDonald’s employed people to do

work at McDonald’s. And maybe what happens in the future is

all those people are looking left and looking right. And

they’re like, you know what, McDonald’s has nothing without

us. We are the business, we deserve the value. So in terms

of how much of the value of the business flows to the

shareholders of McDonald’s, versus the employees that work

at McDonald’s, the employees that work at McDonald’s are

saying, let’s go do a startup. And our startup is called union.

And our business that’s called union is now going to provide a

bunch of services to McDonald’s. And those services, we’re going

to start to value capture what they’re doing. And it indicates

that maybe there’s something inherently disadvantaged in that

model. And it could be that the argument could be made that

that business in the early 20th century, in the late 19th

century, yeah, the 19th century, early 20th century and beyond,

that you could build a good advantaged business, because

there was such an eager hungry workforce, people looking for

work, you people would come and work for nickel an hour or

whatever. And so you as a business owner could make a lot

of money doing that you could sell a product for $1, pay

people 5 cents to make it for you. But nowadays, those people

are looking left, they’re looking right. And they’re like,

wait a second, we are the business, or we’re 90% of the

value of this business. And so a couple things will happen.

Number one is the inherent business model of a company

that’s so dependent on commodity service is going to be

flawed and challenged in the 21st century. And fast food

restaurants aren’t going to be as valuable businesses that

rely on commodity service are not going to be as valuable.

Number two, businesses are going to automate. So new

businesses will emerge that actually do the fast food work,

or do the car building work, or do the dock loading and

unloading work that are automated, and they’ll have an

inherent advantage in the economy, and they’ll win. And I

think number three is that in the near term, consumers will

suffer because prices will go up, because someone has to pay

for the incremental cost of running this unionized business.

And that will ultimately be the customer of that business.

I’ll say the fourth point is, I am concerned about this sort of

behavior in regulated spaces, where the government has

actually control over the market itself. So this is a good

example of this is, you know, we had our friend Ryan from

Flexport on a few times, but you can’t just start up a

shipping company and have a dock, the docks are run by the

cities, and they’re run by the state. And so those docks

access to those docks access to that market is regulated by the

government. So then what happens is the union, right, the labor

company can actually have regulatory capture through the

government of a segment of the economy. And that’s where

things start to get dangerous. So look, I’m all for unions, if

they want to show that a business is reliant on a

commodity labor force and commodity service, and they all

band together and start a startup. I mean, that’s what we

do. We all start a company, yeah, go and compete. But the

issue is then when the government creates regulatory

capture over a segment of the economy, and make it difficult

for the free market to ultimately do its job of either

automating or creating a newly advantaged business model, or

all those things that allow us to progress. automating is

coming. A couple of us made a bet on a crazy idea of like

automated robotic coffee called cafe x. Not to talk our own book

here. And the company really struggled during the pandemic.

But they have two units at SFO. They’re doing 70 to $73,000 in

two units last month. And I’m like, wow, the company figured

it out. And there’s another company doing French fries.

This is the this is the sad thing that California doesn’t

realize is like, I think that the folks writing these laws

have just an extremely poor understanding of economics and

capitalism. Because the first thing that it does, effectively,

and everybody can understand this is, it caps the

profitability of a company, right? Because it effectively

says, if you look at an industry that is over earning,

then this council will essentially see money that

should be reappropriated to employees. Now, that idea is

not necessarily a bad thing. For example, you see that all

the time in technology, right? If you look at the EBITDA

margins of like big tech, and how they’ve changed, they’ve

actually eroded over time, as the companies have had to

generate more revenue, because employees demand more and more

of those gains. That’s an implicit part of how the free

market economy works in technology. So you know, if you

don’t feel like you’re getting paid well at, you know, Google,

you go to meta and you get paid more and vice versa. So there’s

a natural effect of people being able to do that in certain

markets. But when you impose a margin and essentially say you

can only make 10%, because the rest of these profits I’m giving

to these folks, because I’ve imputed their new wage to be

something that’s much greater than what they were paying

before. The unfortunate thing is what Freebrook said, which is

that you will rebuild that business without those people,

because it is the rational thing to do. And so unfortunately,

what you’ll do is you’ll take a bunch of people that should be

in the economy, right? Think about like new immigrants or

young people that are first getting on their feet, they’ll

take these jobs, you know, I mean, I’ve worked for a job.

Yeah, I worked at Burger King when I was 14. That’s how I got

first. Yeah. You those jobs won’t be there to be had. And

that has ripple effects as these folks get older or try to

get more ingrained in the economy. And this is what I

wish California would understand is that these things

aren’t free. And even though they seem like you’re coming to

someone’s rescue, there’s all kinds of unintended

consequences, and very obvious consequences that you’re

ignoring, by not really understanding how the economy

works. I’ll just say, like, look, these people, I can, I’m

sorry, sack, but I mean, you know, the people that are

elected, are elected by the people to represent the people,

they’re not elected to govern over the long term plan,

necessarily for the state. And while you think that those two

may be the same, the near term incentive and the near term

motivation of someone who’s voting is I want to get a

benefit for myself sooner rather than later, not

necessarily I want to make an investment for 30 or 40 years

down the road. And if you’re an individual that’s struggling

in some way, you’re going to prioritize the former over the

latter. And you’re going to elect someone who’s going to

go put in place public policy that’s going to benefit you. So

I don’t necessarily raise my hand and say I blame the people

that have been elected. I raise my hand and I say, look, this

is the natural evolution of what happens in a democracy

where there is a struggling class. And there were where

there is some sort of view disparity or considered

disparity, that this is what’s going to happen in a

democracy under this condition is that you’re going to elect

individuals who are going to go and govern and they’re going to

make decisions that are going to benefit those individuals that

got them elected over the short term. And there may be some real

long term damage that results.

sax is a part of this problem is that people are now looking

to the government to solve their problems in life versus

maybe looking internally to solve their problems and, you

know, negotiate better salaries and no, but hold on, I think you

have to give people a little bit more credit. Nobody was asking

for them to step in like this.

Look, this is as much for the politicians as it is for any of

the workers. What’s happening right now, the National

Restaurant Association and all these restaurant lobbying

groups are flooding the state, the legislators, the governor

with lobbying money, because they want to get this bill

modified, tempered or thrown out. And so this is basically a

racket. Like, look, as a public policy matter, it makes zero

sense for the same worker if they go work at, say, Jiffy

Lube, or something outside the restaurant industry, they get

the California minimum wage of $15. If they go to a mom and pop

restaurant, they get the minimum wage of $15. But if they go to

McDonald’s, they now get a new minimum wage, specifically for

chain restaurants of $22. That simply makes no sense. There’s

no public policy rationale. But the real question you have to

ask and Toronto is kind of getting at this is why shouldn’t

it be $50? Why shouldn’t it be $100? Well, the reason is

because if you raise the minimum wage too much, then these

employers have a huge incentive to replace that labor with

automation. And so the unintended consequence of

Chamath is talking about is that these big chain restaurants

are going to rely even more heavily on automation now, and

they’re going to basically employ less of this labor, where

the price has been artificially raised for that subsector of

the economy for $15 to $22, for reasons that no one can really

explain. So again, this is not for the benefit of workers, it’s

for the benefit of the politicians. Look what’s

happening right now, is all these articles talking about the

lobbyists coming in, they’re going to have Gavin Newsom

begging him to be their savior right now. And this is the game

that the California Democratic Party plays. It’s a one party

state where they were basically business loves Gavin Newsom,

because he’s their protector. He’s the protection end of the

extortion racket. Lorena Gonzalez gets this bill passed,

which is basically incredibly damaging to these chain

restaurants, and they have to go running to Gavin Newsom and

beg him to either veto it or modify it temper the bill. So

it’s not as destructive to their business. He’s a protection in

the extortion racket, but it’s the same racket. This is a one

party state. And what they’re doing with chain restaurants,

they would do with every sector of the economy, if they could,

it’s just a matter of time.

And what is the purpose of the California government? Like, are

there things they could be focusing on other than this,

like maybe the free market settles this issue, and they

could extract benefits from the private sector from basically

the wealth producing part of the economy, and to line their

pockets in the pockets of their supporters, you know that the

typical government worker in California makes 53% more than

their private sector counterpart. And if you factor

in all the pensions that have been promised, it’s 100% more.

Okay, so basically, there’s a huge wealth transfer that’s

taking place, where the we’re basically the legislatures, the

party, they are transferring wealth from the private sector

to their supporters, their backers. And freeware, you talk

about democracy, listen, I mean, California is a one party state

and ballot harvesting is legal here. I’m not saying the votes

are fake or anything like that. But there’s a giant party

machinery and apparatus that literally just goes door to door

and collects the ballots from their supporters. They literally

know who their supporters are on a door by door household by

household level. It has gotten to the point now where the party

machine is so powerful, they can pretty much run anybody for

any post and get them elected. It’s very hard for an outsider


It does feel like I’m getting tired of it here.

No, but guys, that’s exactly how it works. I mean, like, if you

look at Gavin Newsom’s run to the governorship, he paid his

dues, he did the right jobs, he waited in line, he didn’t, you

know, rock the boat, independent of any of the things he did

right or wrong. And he had some pretty big moral transgressions.

It didn’t matter, because it is about paying your dues and

waiting in line, because there aren’t any meaningful challenges

here. None.

In LA right now, there’s a mayoral race going on. And the

two, there’s a runoff between Rick Crusoe and Karen Bass.

Karen Bass is basically a product of the political machine.

She’s basically worked her way up in the Democratic Party

forever, sort of uninspiring candidate. She’s just basically

a puppet of the machine. Caruso is actually he’s a real estate

developer who’s built some of the most landmark, you know,

spots in LA like the Grove, like the Pacific Palisades

development. He’s made incredible. He’s created

incredible amenities for the LA area. He’s also been on a bunch

of civic boards. You know, I had lunch with him at the Grove and

people are coming up to him. He’s like a celebrity. They’re

taking photos with him. He’s the best possible candidate that

you could have in a place like LA. He actually understands

business. I think he would restore law and order. I mean,

all this kind of stuff, right? He’s spoken out about the

homeless problem being out of control. And on election night,

he had the most votes. But five days later, when they counted

all the, the basically the collected ballots through ballot

harvesting, Karen Bass was up by like five points. That is the

power of the ballot harvesting. And I still hope that he wins,

but the party machine is so powerful, they can basically get

almost anyone elected in the state.

Get the ballot.

I don’t know. I don’t really know what it’s gonna take to

change it. What’s that?

Just devil’s advocate here. The ballot harvesting can work both

ways. Like you could go collect Republican votes.

No, but you have to have the party infrastructure to

literally go door to door.

The Republican hasn’t, the Republicans haven’t built that

in this state.

Think about it this way. Okay. So, you know, like your phone,

there’s a platform and there’s an app. Think about the party as

the platform and the candidate as the app. Okay. The platform

can drive a ton of traffic to whatever app they want. A guy

like Caruso doesn’t have the party behind him. So he has to

build his own operating system.

He can use the media, right?

Exactly. So he has to build his own platform. Then he has to

build his own candidacy. So when you think about the amount of

money that’s required to do something like that, about how

hard it is to do it, it’s, it’s very, very hard. So he spent

something like a hundred million dollars of his own money.

Hopefully he wins, but if he doesn’t, all the infrastructure,

all the platform that he created just goes away. And then the

next candidate has to start from scratch. This is why

outsiders, why isn’t the GOP invested in California? They

just don’t think they have any shot because it seems like the

Democrats are investing heavily in trying to flip, you know,

look, there’s a two to one affiliation. There’s a two to

one party affiliation in California towards Democrats. So

look, I mean, the Republican Party here is a mess. And that’s

part of the problem is the Republican Party in California

needs to move to the center. It’s a plus 30 blue state,

unless they’re willing to do that, they’re not going to make

progress. But that could take, you know, generations to fix.

And with Roe v. Wade, and that kind of stuff, it’s going to be

really hard to look, there are pro choice Republicans in

California. But all Newsom has to do is point to what’s

happening in Texas. And, you know, all of a sudden, people

kind of revert to their tribal political affiliations.

I’ll make I’ll make one more simple point. The average voter

in California probably knows more people that work at

McDonald’s than our shareholders of McDonald’s. And I

think in any time that there’s policy that gets voted or gets

suggested, or ultimately gets passed, there’s a side that

benefits and there’s a side that doesn’t. And if you know

more people that benefit on one side than are hurt, you’re

probably going to be supportive of that policy. And I think

that’s probably a pretty simple rubric for thinking about how

these things over time evolve.

I don’t think that’s true nationally. Why is that only

true for California? I mean, like in Florida, the average

person in Florida knows more people who work at McDonald’s

and shareholders McDonald’s, and they’re not engaged in a

systematic takeover of the private sector.

philosophically, they’re, they believe in independence and

businesses not being interfered by the government, right? That’s

a core tenant of the Republican Party.

Also, the sad reality is that within a few years,

unfortunately, you’ll know a lot fewer people that work at

McDonald’s because the number of jobs for humans will be

dramatically lower.

They got rid of the cashiers that’s gone already, or what

people will be more acutely aware of in a number of years

is how expensive McDonald’s has gotten. Because if the price

don’t know that that won’t be because like, again, McDonald’s

has a very simple. No, not not even the market. McDonald’s is

not stupid. They understand how to use Excel. And so they’ll

think, well, I can advertise a robot versus actually jacking

up prices, because what McDonald’s understands is the

sensitivity of pricing to demand for their product. Yeah,

that’s right. I mean, they are the most intelligent about how

they price every anything at the sort of the lower end where

you’re capturing, you know, nickels and dimes, they are the

most sophisticated and understanding supply demand, and

and the curves. And so to think that they’re not going to just

invest heavily now at the corporate level, the next

franchisee of McDonald’s will still pay $1 million for

franchise fee, but will give will be given a bevy of robots

that they run for McDonald’s, and they’ll have to hire half or

a third less. That’s, that’s the real shame of this, which

is the number of people that should actually be gainfully

employed in the economy will then shrink again. But in this

case, it was because legislators just completely don’t

understand how incentives work and how the economy works. And

people are not clued into exactly how well narrow AI

machine learning is doing right now. I’ll say like, it’s really

moving quickly. One general way to think about this is

technology is introduced, and the technology creator captures

roughly a third to a half of the value increment, because of the

delivery of that technology, the productivity increment. So let’s

say that it costs 12 $15 an hour to employ a McDonald’s labor

today. And let’s say that you can build technology that the

amortized robotic cost is $10 an hour, there will be a

technology company that will make 250 an hour off of that. So

net net, what ends up happening is productivity has to be gained.

And prices will reduce. And so you know, there are moments like

this where there could be an acceleration of technology, and

also an opportunity for new industries to emerge. And when

that happens, new jobs emerge, too. So it’s, you know, maybe

look, I mean, at the end of the day, it seems Luddite ish. But

you know, there’s going to be a market market opportunity that

will arise.

I think we need to like, just step back and, and ask what is

the type of economy that California is creating here with

this fast food law with these other laws we’re talking about.

This is a state in which you have a disappearing middle class,

the middle class has been moving out of the state by the

hundreds of 1000s. In fact, last year, we had for the first

time net migration out of the state. This is basically become

a state where the only middle class are basically the

government workers who like we talked about, are making twice

as much as their private sector counterparts. It’s a state where

you have the very rich and very poor, and the only middle class

are government workers. That is what we’re creating, the rich

in the state have done really well over the last few decades.

Why? Because of globalization. So you take the two big

industries in the state tech, and Hollywood entertainment,

they have benefited enormously through globalization, because

now you can sell software, or you can sell movies or music.

Exactly. So now these these industries have become, you

know, massive global exports. And so if you’re in those

industries in California, you’ve done really well, because now

your market is the whole world. So the super rich have done

really well, that’s funded the state that’s allowed the state

it’s almost like a resource curse, to have all of these bad

policies that really hurt small business owners, they’ve been

moving out of the state. And so again, you’ve got the very rich

and very poor. This is not an economic model for the entire

nation. This is what you know, Gavin Newsom says he wants to

take to all of America, this is not a model for all of America.

In order for democracy to function, we need a thriving

middle class. And this is not a recipe for delivering a thriving

middle class to America. And that I just want to show you

guys a quick video, which play for five seconds here. We had

invested in this company that got sold, I’m not gonna even say

the name of it. But if you watch this quick robot, this is a

computer vision company out of Boston. And like, they’re doing

high speed picking of tomatoes and berries. Like this is a two

year old video when we invested and wound up getting bought by

another company, and they’re doing vertical farming. But and

there’s companies doing this now for franchise, it’s over, like

we are within, you know, I think 510 years of a lot of these

jobs, we’re talking 10s of millions of manual labor jobs

being gone. And and we’re going to look at this moment in time,

where we tried to squeeze an extra 10 or 20% out of these,

you know, employers, and then you’re going to see these

employers say, you know what, 24 hour a day robot? Yeah, it’s a

little bit upfront cost, I’ll put it on a lease, and they’re

just going to move to these robots. It’s really very close to

being game over for manual labor. And you can see it also

with Cybertruck. And you know, what Elon’s doing with AI, and

these things are getting so close. And it’s been, I don’t

know, when did you invest in your first robotics or AI

company, Saks or Chamath? Do you remember the first robotic or AI

company you invested in? And how long ago was

  1. It’s a company called relativity space, which is 3d

printing rockets and engines. And basically, they’re able to

use machines to learn how to actually fix the morphology of

all the materials that they use to print better and cheaper and

more useful rocketry. That’s an example. But then that led me

down the garden path, I was just going to say something more

generic, instead of talking our book, which is, I think people

misunderstand that Moore’s law has actually not ended. And this

is something that a friend of mine, Adam D’Angelo,

characterized to me, beautiful human being from work together.

He was a CTO of Facebook when I worked there. So we this is, you

know, we’ve known each other for 1516 years. And now he’s a CEO

and founder of Quora. But you know, the way that he described

it to me, which is so true, the minute he said it, I was like,

my gosh, it’s like Moore’s law never ended, it just shifted to

GPUs, you know, because the inherent lack of parallelization

that CPUs have, you solve the GPUs. And so that’s why the

the surface area of compute of innovation has actually shifted

Jason to what you’re saying, which is, you know, all of these

new kinds of machine learned models, because you can just now

brute force and create such a tonnage of compute capabilities

and resources to solve these problems that weren’t possible

before. So, you know, you see this thing, you know, fun things

like Wally, or, you know, Dali, sorry, and more sophisticated

things like GPT three. But he’s right, which is that, you know,

we are at a point now where all kinds of expert systems, which

is sort of like v1, simple forms of AI are going to be completely

next level. Well, you think about the data sets adding to

that. And so when government exactly. And so when governments

don’t understand this, and they try to hit, you know, step in,

they’re going to be shocked at how much faster they’re pulling

forward the actual future they actually are trying to prevent.

Yeah, the the data sets is the other issue, Friedberg, you look

at, you know, the the data sets that are available to train. So

you have the GPUs still escalating massively, the amount

of compute power can do you have cloud computing at the same

time, and then you have these data sets. One of the most

interesting things about, you know, Dolly, and a lot of these

is the corpus of data they’re able to absorb. And a second

factor issue that is starting to come up is who owns the

derivative work in copyright. So if you train your data set on

a bunch of images, and those images are owned by Disney, or

whoever, you know, photographer Getty, and then the AI makes you

a new photo. So here’s another example of this. Here’s another

example of this in a law that just passed. So in the IRA, the

Inflation Reduction Act, you know, we granted CMS and Medicare

the ability to negotiate drug prices. And we actually also

capped the total prescription costs that any American can pay

at $2,000. Now, it turns out that overwhelmingly, most

Americans will never spend $2,000 a year on prescription

medications, but there will be a few and they bump up against

drugs that cost millions of dollars. So there was a, you

know, there’s a drug for, you know, SMA. That’s like, you

know, 2.4 million and like, you know, beta thalassemia, like

2.8 million. And you’re and and we will all bear the cost of

that. Now, if CMS and Medicare, go and really crunch those

costs, what is pharma going to do? Well, pharma is going to do

what is the obvious thing, which is like, if you’re going to

cap what I can make, I have to completely change my R&D model.

And they’re just going to use alpha fold, you know, and what

it’s really going to do is potentially put a bunch of

research scientists, how to work. And those are folks that

should probably in the, you know, for our general future be

gainfully employed. But the nature of their job is going to

change completely because the economic capitalist incentive

of big pharma is going to move towards technology, which is,

you know, an alpha fold, and their protein library is the

equivalent of AI and automation for McDonald’s. So this is

where, again, governments have to be super careful that they

understand what’s actually happening, because they’re

creating incentives, I think that they don’t completely


All right, we can go to raw meat for sacks, Zuckerberg’s

admission of FBI meddling, truth social.

After you guys disputed me and like, how dare you imply that

J. Edgar Hoover and Jim Comey’s FBI is politicized. Remember,

you guys were debating and

that was about the investigation.

You didn’t, but some of you were saying, I can’t believe

sacks that you’re part of the 35% of Americans who don’t

believe fully in the rectitude and integrity of the FBI.

I don’t know if this is

comes this bombshell. I mean, you gotta admit this was a


What was a bombshell? Okay, so I’ll get up here. Okay, so Joe,

Joe Rogan had Zuck on. And he asked him about this very

specific thing. Remember the New York Post story on Hunter

Biden’s laptop in like the week or two before the election was

censored, right? And there’s a very controversial thing,

because the FBI was dealing with known Russian interference

and hacks and all this stuff. Part of which Trump was like

asking people to hack other candidates.

Okay, you’re not even setting this up correctly.

Well, okay, I’m gonna keep going. And then so this is what

Zuckerberg said, Hey, look,

let’s moderate this segment.

Well, I mean, I’m just gonna read the Federalist, which is,

you know, super right wing, but he says, I’ll just read you

what Zuck said, because that’s says it all. He says, Hey, look,

if the FBI, which I still view as a legitimate institution in

this country, I’m quoting from the Federalist, which is

quoting him from Joe Rogan. It’s a very professional law

enforcement, they come to us and tell us we need to be on

guard about something I want to take it seriously. So when the

New York Post broke the Hunter Biden laptop story on October

14 2020, Facebook treated the story as potentially

misinformation, important misinformation for five to seven

days while the tech giants team could determine whether it was

false or not. During that time, this is federal speaking,

decreased its distribution, Facebook decreased distribution

of the story by making the story rank lower in the news feed.

And this is his quote, Zuckerberg, you could still

share it, you could still consume it, Zuckerberg explained,

but quote, fewer people saw it than would have otherwise.

And while he would not quantify the impact, the Facebook

founder said the decreased distribution was quote, unquote,

meaningful. And a follow up Rogan asked if the FBI had

specifically said, quote, to be on guard about that story,

meaning the laptop story, after originally responding, no,

Zuckerberg corrective says, I don’t remember if it was that

specifically, but it was basically the pattern. So

basically, I guess you would agree, sacks, Zack didn’t know

exactly what to do here with this information. And if it was

real or not, which, you know, it turned out to be very real,

and it probably could have swayed the election. I mean, I

do think if people thought there was a connection between

Hunter Biden, maybe it could have, I don’t know if we want

people being hacked to do that. So what’s your take on it?

sexy, you know, just hacking in general, and the specific

thing, what should the FBI do? If these kind of hacks are

getting released of people’s families? Okay, so yeah, here’s

a complicated issue, right? There’s many vectors. Yeah.

What Zack basically says the FBI came to them and encourage

them to suppress the story or to suppress a story that they

described, that would be just like this. Okay. So now look, a

lot of conservators are dragging Zuckerberg and Facebook

for doing for doing the FBI’s bidding. But I think a lot of

people, I think most people in Zuckerberg’s position, would

have believed the FBI when the FBI comes to you and says,

you’re about to be targeted by Russians information, you need

to do something about it, you would have listened to the FBI,

he believed the FBI, my point, and so I don’t blame Facebook

too much for that. I think it’s understandable that he would

have believed them. The issue here is the politicization of

the FBI. Look, let’s back up what was happening. So the New

York Post gets this story about the leak contents of other

Biden’s hard drive. In response to that, you had 50 former

security state officials, many of whom were democratic

partisans, like Clapper, like Brennan, they signed a letter

saying that this story has all the hallmarks of Russian

disinformation. Now, the truth is, they had not inspected the

hard drive. They simply said, this is the hallmarks of it. And

as a result of that, we thought that the social networks and so

forth censored the story. Okay. Now it turns out that the FBI,

by the way, the FBI had the hard drive, that the hard drive for

over a year, it was an image of the hard drive with the actual

hard drive, they had the actual hard drive, the leak of the

story was, was likely prompted because the FBI didn’t appear to

be doing anything with the hard drive. So somebody leaked the

story to, you know, to Rudy Giuliani, and then he leaked it

and so forth to the New York Post. But the point is that the

FBI had the hard drive. So they knew it was authentic. Okay, so

they knew that this hallmarks of Russian disinformation was not

the truth. Because again, they had the authenticated hard drive

in their possession. And yet they still went to Zuckerberg

and basically played into this narrative, this phony narrative

that, you know, democratic partisans like clapper and like

Brennan had created.

Was there anything meaningful, by the way, about what was on the

laptop in your mind? Like, do you think it’s relevant? Or do

you think we want people’s laptops being hacked like this

were in people’s political families?

I don’t think the laptop was hacked. I mean, there’s a weird

convoluted story about laptop ended up but but look, the

point is that personal pictures, you know, and stuff like that be

never liked the part where they were showing 100 biden’s, you

know, drug use and the other personal stuff. I thought that

was scurrilous. And I didn’t I didn’t like it. And I didn’t

think that was particularly germane. So I think and I think

it was an invasion of his privacy. However, there were

materials on there related to his business dealings in

Ukraine. And I don’t say see how you can say those weren’t

relevant. Oh, I think it’s being investigated for them to now. I

mean, a lot of this has to do with timing to you know, it’s

like, how do you deal with something like this seven days

before an election when you know the Russians are hacking it, if

it has been or not, it’s a really difficult situation for

everybody. So look, my point, my point is this that I can agree

with you about the personal stuff about 100 biden shouldn’t

have come out but but with respect to the Ukraine stuff

that was legitimate, it was fair game. And the most

importantly, I don’t know whether it would have swung the

election or not, probably not probably by itself. It’s not but

the real point here is that the FBI went to Facebook to

censor a story that they must have known was true because they

had the laptop in their possession. They should not be

intervening in elections that way. That is the bombshell here.

That’s unbelievable. I think they didn’t know the providence

of this, but I guess we’ll find out where you land in the

providence of a hard drive that’s in their possession.

I didn’t have an NFT. Exactly. How are you? I think the

audience circle tomorrow. Exactly. Yes, exactly. No, but

sex audience really wants to know where you were going to

reserve judgment on the Mar-a-Lago search. Where do you

and or republicans come out on all this now when you see

lucky he did in fact have a ton of really sensitive stuff,

like it’s not a ton of defined ton of really sensitive stuff.

Yeah, I mean, he wouldn’t give it back like what’s your what

is your pages of documents mark classified? If you were to go

to the 30,000 boxes of documents that Obama took, are you telling

me you really couldn’t find 300 pages that have classified

markings on them? Well, the fact that he wouldn’t give it

back. By the way, I never disputed. Hold on a second. I

never disputed that they would find documents with classified

markings in Trump’s basement. I still think that the approach

was heavy handed. And we don’t know enough because we don’t

know what those documents are. Every document they stick in

front of the president or not every but many of them are more

classified. Let me ask you this, aside from these like kind of

details. What is what is Trump’s deal that he just wouldn’t give

them back? Do you think what do you think his motivation was? I

mean, I have my own theory, which he likes memorabilia. He’s

always like to show off. I think that’s it. I think you got it. I

mean, honestly, if I had to guess what this whole thing was

about, it’s probably that the archivist at the National

Archives, once the original copy of those letters with little

rocket man, and he doesn’t want to give them up. Right? I

literally think that’s what this is about. I think it’s about

something as silly as memorable memorabilia. It’s about

memorabilia. I do not think these documents pose a threat.

When Trump just give it all back. So dumb. But why would the

FBI feel the need to do a raid?


by the way, remember, remember when we first discussed this

post, like when we first discussed this issue, we were

told it was nuclear. It was nuclear secrets.

Could be. Yeah.

No, they’ve backed off that completely. It was not in the

affidavit. It’s not about nuclear. That was something they

leaked to get them through a tough press cycle. So but look,

my point about all this stuff, just to wrap it up, so people

are clear was never to defend Trump, per se. My real concern

is the politicization of the FBI. Our law enforcement agency

should not be weaponized by either party to pursue their

but you believe they are at this point. And we just saw with

the Zuckerberg thing, what business did the FBI have going

to Zuckerberg to get them to censor a New York Post story

that turned out to be completely true? Hold on a

second. That is election interference. They should not be

doing that. Yeah, that is a tough job. If they don’t know

if it’s been stolen or not. Yeah, it’s a tough job. By the

way, the government of the United States has no business

censoring a free press. That is a violation of the First

Amendment. When the government instructs a private company to

censor a press story that the government itself does not have

the authority to censor. That is a violation of the First

Amendment. We thought remember when Jack Dorsey said that he

regretted the censorship that Twitter did. And he came out

with that apology. We thought it was just Twitter’s decision.

Now we find out from Zuck that he was leaned on by the FBI. And

I think that these big tech companies like Twitter, like

Facebook, they’re going to have to have a new policy, which is

when the government says we want you to censor something,

their response needs to be show us a court order. They’re not

just sensor now based on the say so of some operative. I

would agree with you. I agree with you on that. I think it was

a bad decision. Obviously. The one big tech company that

really nailed this, I think was Apple, you know, very early on,

they drew a really hard line in the sand with the San Bernardino

shooter, because they said, if we allow the FBI to get into

this person’s phone, even though, you know, what he did

was completely heinous, we are going to create a backdoor that

will become an exploit for everybody. And we are drawing

the line on privacy and security. Now, different set of

issues, but it just goes to show you, there have been a few

examples where some of these companies have drawn a hard

line. And then in that example, and I think Jason, you

mentioned this, they went to Israel and have that company

hack the phone, whatever, but it didn’t come with, they were

able to stand up to the pressure. So I think there are

some example sets where you can say no. I mean, that the idea

that Twitter would block a New York Post URL, it’s like, ah,

such a jump ball. Like, if it was the sex material, I could

understand them saying like, you can’t hack it. That’s

against our terms of service for and we agree on that sex. But

in this case, like, I don’t know, let’s go to something

more interesting. Well, heat wave, I think in the drowning,

I know this is interesting to sacks, but I think it’s

interesting to everybody else in the audience. Heat waves and

droughts are just use flashes hot in summer. Yeah, I think

this might have to do with global warming and be a little

unique. I’m kidding. I’m kidding. I know there’s more

to it for all the SGP people get into sacks and say, you

know, your globe, you believe in global warming.

By the way, I do think the death of Gorbachev is a big

story. Okay.

Let’s give free Burke his science corner. And then we’ll

come back around. I give you your raw meat.

What’s your what’s your point of view on climate change, the

impact it will have on the planet? And whether like urgent

action is needed?

Listen, I’m not an expert in that area. I’m not going to

pretend to be I do think that that we can’t save the planet

by destroying the economy. And it seems to me that too many of

the save the planet people like want to take reckless extreme

actions that would wreck our economy. You just saw actually

Ilan just gave a talk this and made news this past week from

Norway, where he said that we still need oil and gas. He’s the

leading innovator in basically moving.

And he said, Listen, unfortunately, we got to rely on

oil and gas because it’s too important for civilization. If

we cut this stuff off too quickly, we end civilization.

I think this is a long term problem. But and I think we need

to have long term solutions. Global warming, just full stop.

The planet is warming. You agree with it? It’s not just

about warming, just just just to use a different term, that

there are more frequent extreme events that can severely hurt

people hurt the economy hurt the food supply hurt the energy

supply, all the things that, you know, I think we’re like all the

way on the bottom of Maslow’s hierarchy, like, these are the

things that are most critical that they’re starting to get

disrupted in a pretty severe way. You know, I think that

that’s, that’s, I mean, that’s the big question. So sex, it’s I

think it’s becoming and this is where the transition starts to

happen. That a lot of people kind of say, hey, over the long

run, the temperature is going to go up by one degree Celsius

over a century, you know, who cares? But there are the

problem. The problem is this is that, you know, by the way, I

don’t disagree with me points out how insane some of these

policies are. I the topic is shifted to Are you a denier of

some science or other? No, no, listen, my point is not about

the science. My point is look at the collapse of the Sri Lankan

economy, because they implemented these ESG rules on

fertilizer, look at what’s happening to the Dutch farmers

are being put out of work, because of California,

California today, govern Governor Newsom today said,

please don’t use your electric power to charge your electric

cars. A week after they said, gas cars are now going to be

banned in the state. And so there’s a great is going to go.

There’s a deep irony underway today in California, because

and Fox News is obviously latched on to this story.

That has to do with the grid, though. I mean,

look, I’ve

whatever, whenever politicians invoke some crisis as the as the

reason, I’m not talking about some authoritarian, I’m not

talking about the political measure, I’ve learned to

distrust it. That’s the point. And so I guess I’m talking, you

know, what’s happening in Europe right now is obviously gases

through the roof, because of the Ukraine war, the you know, the

price has basically gone through the roof. And so because of

that, they’re not able to produce fertilizer. And one of

the byproducts of the production of fertilizer is co2, which

gets added to the production of beer to make it fizzy. Well,

guess what? The Germans are not only about to run out of gas,

they’re about to run out of beer. You think you think

they’re going to keep supporting the Ukraine war when they find

out that there’s no beer for Oktoberfest. Forget it, I’m not

gonna be able to eat their heat their homes. They can’t drink

beer in October. Yeah, this is the

we need to sit.

Just taking up just taking a poll, just taking a beat for a

minute, like taking taking off the table, the political

response. Are you as an individual concerned about the

impact of a changing climate on people and on the economy? And

are you interested as an investor in the private market

solutions to resolve some of those things that are obviously

going to become market driven problems? Take the government

out of the equation?

I think there may be a long term problem here. I’m not sure like

how long it takes. I definitely think I’m skeptical of this

claim that, you know, the world’s going to end in the next

10 years. Because frankly, we’ve been hearing that since the

1990s. I mean,

1988, there’s a great headline article, by the way, in New York

Times, where it was like scientists in 1988, said that

all the oceans, all the ice caps will melt, the oceans will

flood the land by the year 2000. So there is a credibility

challenge associated with predicting, you know, kind of

long term outcomes like this, that that continues to kind of

foment, unfortunately, right?

Yeah, all my beachfront property would be underwater right now,

if all that came true. No, I’m just kidding. But No, but but

look, it hasn’t escaped my attention that many of the

political leaders who are claiming that we’re facing

imminent threat of being underwater in 10 years, own

beachfront property, and fly on private jets. So obviously, you

know, I’m not saying this isn’t a long term problem. But I do

think they try to create an imminent crisis, so they can

shove through a bunch of bad policies that are very

destructive to the free bird.

Would you define what’s happening with temperature and

extreme weather as a crisis or not?

Um, yeah, I mean, there’s, there’s a, I would say there’s

a critical impact in and will continue to be a critical

impact in the food supply chain, in the quarters and years ahead,

because of what we’re seeing. So severe drought and heat wave

in China right now. And by the way, food is not the only one

there’s there’s also the manufacturing supply chain. So

in the province of Sichuan in China, they actually lost power

because so much of the power is driven by hydroelectric plants.

So streams and water flow has slowed down and stopped. As a

result, there’s less power as a result, the factories are being

shut down. As a result, key components for manufacturing in

the computing industry, and, and kind of mechanical goods are

not being produced at the rate that they were being produced

before that has a ripple effect in the supply chain, similar to

what we saw in COVID. And then in the food supply chain, we’re

seeing a drought and a heat wave. Right now, we’re coming

out of it in the Midwest in the United States, where we grow

corn and soybeans throughout Europe, and also in China. And

in China, they had 70 days in a row of record setting

temperatures, 70 days in a row, every day was a record. No

water, high temperatures, the they’re just starting to assess

the crop damage, it looks pretty severe. There was

massive crop damage in the Midwest, in the corner, the

Corn Belt this year. And then obviously, European farmers are

having issues. And combine that with the geopolitical issues of

the Ukraine crisis and the natural gas pricing being so

high. One third of fertilizer of ammonia plants have been shut

down in Europe. And they think that ammonia and fertilizer

production may drop by as much as one half in Europe, because

of the crisis. So energy prices are so high, you can’t make

fertilizer. So that energy is being also redirected into

other industry and support homes. So you believe it’s a

crisis. So I guess the question, yeah, people are turning on

their ACs in California this week, you know, you see that

Governor Newsom just said, our grid in California cannot

support excess electricity consumption. Therefore, one of

the biggest variables is electric cars. He’s saying

don’t plug in your electric cars this week. And that’s

because of record high temperatures are about to hit

California in two days. So look, everyone says, hey, these

are kind of anecdotal stories. But no, it’s really,

statistically, the frequency of extreme things happening is

continuing to climb. And then the impact is in the food supply

chain, the energy supply chain, and the manufacturing supply

chain. And there are follow on effects. Now, I’m optimistic

that private market solutions will resolve these issues. And

that was my next question is, can we solve this or not? Yeah,

of course. I mean, look, we’ve had crises since the dawn of

humanity. I mean, we were a starving, you know, we need a

crisis to solve some of these problems. These are pretty

economically obvious. Yeah, and that’s, that’s my point, the

private market will resolve because people want to have

electricity, they want to have food, they want to have not

want or need they need. And so so so the market will pay for

those things. And therefore, producers and technologists will

resolve to solutions to make that happen. So we just have to

have a problem and suffering and see it firsthand Shama, the

market again, our friend in the group chat that shall not be

named posted this meme. You guys saw it right, which said like,

an autistic school girl takes what was it? I have it here

quit school, the dominoes, the dominoes, you can show the

dominoes. But basically, it said, an autistic Swedish girl

decides to skip school is the little domino. And seven

dominoes later, this huge domino, it says the collapse of

Europe’s energy grid. And without commenting on the

language used in the meme for a second, what is the point? The

point is, these conversations can so quickly go off the rails

and are not about national security and economics and

quickly become about moral virtue signaling that you missed

the point. The point in the United States just to be very

blunt, is that the cost of electricity has gone up by 46%

in the last decade, it will go up by another 40 odd percent

through 2030. So between 2010 and 2030, the cost of

electricity for every single American will have effectively

doubled, even though the ability to generate, particularly

from wind and solar, have been reduced by 90%. Now, why is

that? Well, it turns out that if you look inside the PNLs of

these utilities, it actually gives you the answer. So over

the next 10 years, we have to spend as a nation, just just on

upgrading power lines, $2 trillion. This is all cap, this

is all like crazy, crazy opex, right? capex improvements for

sunk cost investments, our power line infrastructure in

America is 20 plus years old, 30 years old, our generation

infrastructure is pretty poor. We have all of these failures,

we don’t have enough peakers, we don’t have ability to store

energy when we need it. So if you add this all up, I do think

that there’s a huge economic incentive to solve it. And there

are practical ways to solve it. And that’s what we have to stay

focused on. Because if we allow the moral virtue signaling to

get in the way, we’re going to make some really stupid

decisions, we’re going to keep trying to turn off nuclear.

Another thing that Elon said, you know, we’re not going to

greenlight shale and nat gas, we don’t have time for this. If

you actually believe this is a cataclysmic issue, you need to

basically be okay with hydrocarbons, because it is the

only credible bridge fuel we have to keep the world working

properly. Because otherwise, what David said, is right, we

are going to economically destroy parts of the world by

trying to race towards this net zero goal. By the way, guys, I

just want to take the you know, rip the bandaid off net zero by

2050 26. It is not possible. There is zero credible plans

that the world has to do it. So we have to take small

incremental steps. And many of them. Yeah, this is and we

should stay focused on that. Yeah, the interesting thing,

and you cannot let people guilt trip you because this is when

you make these stupid mistakes, like the entire continent of

Europe made, really, which is now going to cripple. Here’s

economies of that of that entire continent unnecessarily,

here’s the good news, all this virtue signaling and people

wanting to be green, and for whatever reason, all of that

now economics and geopolitical is forcing people to rethink

nuclear, the Diablo Canyon nuclear power plant, which is

the last one in California that’s operational. It’s being

voted on today as we’re taping this, and it’s expected that

they’re going to keep it online, the governor with the great

hair wants to keep it going. And the fascinating part about

this is how what choice does he have? Exactly. And so now the

awareness is so high about power and us losing it and asking

people to turn off their air conditioners, turn off, don’t

plug in your cars, but people people don’t understand how

nuclear energy even works. And they’re like, get rid of it.

They went to a no nukes concert in 1978. And they haven’t

changed their position since. But this is interesting. This

guy, Gene Nielsen, who’s been a champion of this stuff. He said,

I thought our chances were zero of keeping this thing open. And

he said, what’s you know, and he said, he told this conference

of attendees, this nuclear conference, that the effort to

maintain it, he said, what’s happened since, you know, the

last six months has been like a snowball, that everybody has

changed their position just in the last year on shutting these

things down. And we saw obviously, Germany is re, you

know, thinking the three remaining of their six that

they were going to turn off, they’re putting back on. And I

think we’re going to see new ground broken. And Japan came

out just in the last week and said, they’re going to build

more nuclear power, and nuclear power plants. Now think about

that. That’s awesome. That’s unbelievable. They had

Fukushima, the Germans shut off their nuclear because of

Fukushima. But guys, the Japanese are saying we’re

building more fuka guys, Fukushima didn’t happen by

accident. There was a like, an incredible tsunami, which was

triggered by an earthquake. You’re talking about these

extremely long tail events. Yes, the retaining walls could

have been built better. But these are things we find we

iterate and we solve it was not the reason to shut down an

entire mechanism of energy generation, stupid mistakes

where they put it just too low in the wrong place. If they

just put it up the hill a couple of miles, it would have

been fine. But also, if you look inside of what happened,

there was enormous pressure inside of these companies to

basically, you know, take take actual direct blame and

responsibility. I get all of that. But these organizations

were shamed into turning these things off. That is not the way

to make good, smart decisions. Okay, so Gorbachev, the last

ruler of the USSR passed away this week, Sachs. Yeah, I mean,

I think this was a real milestone. You go back to the

1980s. And Ronald Reagan, the who had spent his entire career

being a cold warrior, saw the opportunity to basically do

business with with Gorbachev. Margaret Thatcher had told him

that this is a man we can do business with Gorbachev had

come to power in 1985. He had initiated reforms of the Soviet

system. He was a communist to be sure. But he introduced

political reforms called glasnost and economic reforms

called perestroika. And Reagan sees the opportunity to go meet

with him and they signed arms control treaty after arms

control treaty and ended the threat of mutually assured

destruction that the world had been living with since the

beginning of the Cold War. You got to remember that, you know,

the Cold War began shortly after World War Two. And we had

this doctrine of mutually assured destruction or mad and

the whole world is living under the shadow of nuclear

annihilation. This was showed repeatedly when I was a kid.

There was a TV movie called the day after the day it was

it was really scary. Lord, they terrorized us that America and

we’re all gonna die. We had Did you ever have nuclear bomb

drills? We had to get under your desk? Yeah, I mean, so yeah,

so if you’re like our age, you remember this that that movie,

by the way, that that was a TV event movie that was one of the

most widely watched movies. But there were others, you know,

Jim Cameron used this concept in the Terminator movies. You

know, it was something that people were really afraid of.

And Reagan sees the opportunity thought fundamentally that

nuclear deterrence was a moral that yet better to have

deterrence than a nuclear war, but that he if he could, he

sees the opportunity to negotiate the end of the Cold

War. And by the way, there were hardliners in his

administration, who did not want him to negotiate with

Gorbachev. But they ended up doing a series of meetings

culminated in 1986 at the Reykjavik summit. And they

signed deals to remove, you know, these, these INF system

deals now, and that ended the Cold War. And then basically

what happened is in 1989, the Berlin Wall came down.

Gorbachev allowed the Western the Warsaw Pact countries to

leave. And then in 1991, the Soviet Union collapsed. So,

you know, he gets a lot of credit for being willing to

reform that system. Now, the sad thing is, if we were fast

forward 30 years later, where are we today, we’re back in a

new Cold War with Russia, I mean, that we’ve been spending

a good part of this year talking about the threat of a

nuclear use. And, you know, this was a problem that we

thought was solved 30 years ago. And now we’re back with

it today. And you’ve got to ask, have the successors of,

you know, Reagan and, and, and George Herbert Walker Bush,

the people who inherited our foreign policy over the last

30 years, have they done as good a job as Reagan did,

Reagan ended the Cold War, we are back in a new Cold War.

Why? What is the reason for this? There’s been a, a series

of stupid policies that now have put the risk of nuclear

war back on the table.

My interest in Gorbachev is slightly different. He is an

incredibly important character. The second half of the 20th

century, undeniable, you know, won the Nobel Prize, as you

said, David kind of ended the Cold War. But the most

important thing, in my opinion, was the precursor to

perestroika, and why he did it. And as you said, like, you

know, this is a fairly ardent communist, although he had

really interesting views, like he ran a very kind of like,

open kind of Politburo, where folks could debate, and he,

you know, promoted a lot of young people from within all of

these interesting things. But the most important thing, and

he’s written about this a lot is the reason that he embarked

on perestroika was because USSR at the time had an incredibly

poor work ethic, terrible productivity, and horrible

quality goods. And I think that there’s something to be

learned by that. Because at the tail end of communism,

essentially, where you had central planning, central

imposed economic principles, what happened, people did not

feel that they had any ownership in the outcome. No

agency, no agency whatsoever. And I think that there’s a

really important lesson to observe there, which is that if

governments get too actively involved, this doesn’t just

happen in Russia, it happens everywhere. It’s happening in

California. We just talked about it. It’s happening where

we live right now. And if you look at then what happened

afterwards, it became the aristocracy that basically

ruled the USSR before and then fighting against all these

folks that wanted reforms. And that created this schism, which

then perverted capitalism for, you know, seven or eight years

through Yeltsin until Putin got there. And that’s what created

the oligarch class and, you know, really exacerbated a

bunch of wealth capture by a handful of folks that may or

may not have deserved it. And I’m not going to judge that.

But I just think it’s really important to understand that he

was forced to embark on this, because of all of these state

central planning policies. And so it’s just an important

lesson for Americans in democracy, which is careful if

you want more government, you might get more government guys.

The Soviet Union, their economy used to run on what they called

five year plans, it was incredibly centralized, it was

all run by the government. And, you know, this was communism.

And the 20th century, the second half, especially, was a

giant battle of systems, not just of countries, not just the

Western Bloc, you know, led by the US, the free world versus

the Soviet Union, the Warsaw Pact, it was also a battle of

philosophies and systems, it was the philosophy of state

control versus freedom, and, and a free economy and freedom

one, you know, the free economy won in that battle. And the

crazy thing is, 30 years later, we’re talking about socialism

being a viable doctrine, you have politicians, basically

saying that they are socialists. But 30 years ago, you would

have been like, that was

and the point is, example after example, empirical evidence,

well documented of just how it doesn’t work. And I guess the

thing is, you know, we all say, like, you just have to learn it

for yourself. You know, like, you’ll tell your kids to do to

not do something ad infinitum stuff. Yeah, they got to touch

the stove themselves and get burned. We are about to go do

that in California. Can you imagine if like people who want

to be socialists here, who bind us if they had to be in a food

line or have rations? Literally, Russia had food lines, and they

were rationing food in the 1980s. Like, well, yeah,

a large driver of Gorbachev basically negotiating these

peace settlements with, you know, with Reagan, and this

nuclear, you know, demilitarization was in part

because he knew he couldn’t fight. Right? It was this

realization that say, that’s that centralized system was

collapsing. Yeah, he could not keep up. Reagan began an arms

build up, and there was an arms race and they were losing.

They were losing. They were losing. This is and this is why

like people should not misunderstand what Gorbachev

was. He was not necessarily some democratic freedom fighter.

He was a person who was observing the on the ground

conditions of a socialist system, decay their ability to

compete. And so he had to capitulate before it was forced

upon him. Right. Meanwhile, the United Right, this is why I

don’t think he deserves as much credit as Ronald Reagan is

because at the end of the day, Gorbachev would have kept

communism going if he could have if he could have if he

could have wanted the Soviet Union to stick stick together.

I mean, he that’s right, but his but but I think to his

credit, when the things start to collapse, he didn’t use

violence and repression to try and hold it together. So, you

know, he was a he was a reformer. He was a liberalizer

pragmatist, maybe and a pragmatist and didn’t use

violence. But and ultimately, he was a partner for Ronald

Reagan. Remember, Ronald Reagan began this gigantic arms

buildup. He was denounced as a cowboy who would get us in

World War Three. But when he had the chance to negotiate a

deal with Gorbachev, he took it and they basically got arms

control. And it was because Reagan was able to sit on top of

an extremely productive capitalist system that allowed

him to make those investments that made that capitulation.

Basically, and I think that that’s another thing for a lot

of us to to understand, which is free market capitalism,

removing these degrees of decision making, give us

degrees of freedom. And I’ve said this before on the last

part, the great thing about the IRA and what Chuck Schumer did

is actually will be written in 10 or 15 years from now,

because when we get to energy independence, when every home

is resilient, the national security calculus in America

changes wholeheartedly overnight. Yeah, I mean, think

about two years ago, right, but I didn’t cancel that. Okay,

well, listen, no, it’s true. If you’re willing to use natural

gas and fracking America is one of the richest energy

countries in the world. We produce a lot of oil, too. Yeah.

I mean, listen, it will change everything if we can really go

all in on all of the categories nuclear. It’s just it’s just

the fossil fuels. And if you know, if you let the capital

markets do and the free markets do what they’re meant to do,

they will empower the government to do great things for all of

you. All citizens. Yes, I agree with 100%. And the reason we

want to stop it is because we have a couple of examples of,

you know, extreme wealth. And I think that’s something we have

to think about is like, are the extreme is the extreme wealth

created for a certain class, enough to stop the prosperity

train that we actually have an American Jason, the politicians

in California think they can run fast food businesses better

than the people who own those, those restaurants, people have

never worked in their lives. No, I mean, we have the great

thing is they wouldn’t. Yeah. The great thing is we have a

running a B test, which will show whether this state central

planning can work or not. And again, if we refuse to want to

listen to the examples of Russia, or all of these other

countries that have tried this, then so be it, we will know in

the next three to five years that these policies actually

don’t work. And actually, that it actually accelerates the

exact hellscape that they think they’re trying to avoid.

But you know, not only to my point about foreign policy, not

only are we forgetting the lessons of this Cold War, the

economic lessons that a free enterprise system generates

more wealth and prosperity, and more national greatness, more

ability to fund a defense budget, create a better

economy. Not only does it do all those things we forgot, not

only have we forgotten that, but also, we have abrogated, we

have ended every single defense control and arms control treaty

with the Russians that Reagan and Gorbachev signed. Why? Why

did we do that? Now our nuclear missiles are pointing each

other again. And you know what, Russia’s a much poorer country

in the US, we’re actually 15 times richer than them. During

the Cold War, at their peak, we were only three times richer

than them. But we’re 15 times richer, but they still got over

6000 nukes. Why do we get rid of all those arms control

treaties? Why have we basically alienated them?

Yeah, we talked, we said it before, like, you’re dealing

with a pragmatist, and Putin’s a KGB agent.

Maybe you feel like Putin isn’t someone we can deal with now,

but he was someone we could have dealt with 10 years ago, 20

years ago, I mean, we missed the opportunity to deal with him,


If he was a rational actor, we would be able to deal with him.

I think the only way he’s actually going to be really the

only way we’ll be able to deal with him is if he doesn’t have

the oil market he has, like he just has too much power from

that oil. And over time, that’s the solution. We have to be

energy independent, you know, I think Europe is learned that

lesson. We have was a communist, he was an heir to Stalin, and

yet Reagan’s could still do business with him and sign an

arms control treaty, so that we could end the risk of mutually

assured destruction. We took you don’t have to believe you

don’t have to believe that Putin is a good guy in order for us to

avoid getting back into a Cold War, which is the situation we

find ourselves in now, how does it benefit us to have Russian

nukes once again, pointed at our heads? Yeah, I mean, and the

reason why with the reason why we alienated him, Jason has

nothing to do with him being a madman or whatever it is, because

we brought NATO, which he views as a hostile military alliance

right up to his border. And by the way, listen to this video

from Gorbachev. Gorbachev was asked about NATO expansion. In

front of the US Congress, he was giving a talk to them. And

they asked him, Gorbachev, what do you think about NATO? And

what did he say? He said that you cannot humiliate a country

this way, and expect there to be no consequences. Gorbachev was

against NATO expansion. When when basically George Herbert

Walker Bush and the Secretary of State James Baker went to

Gorbachev to argue on behalf of German reunification. This is

basically in 1990. Baker made the promise to Gorbachev not one

inch eastward. Gorbachev said, Yes, okay, they can reunify. But

we do not want NATO moving up to our border. Baker made that

promise, we have brought NATO up to their border. That is why

Putin regards us with hostility.

Yeah. And I think Europe regards him with hostility, and

they’re scared of him because he keeps invading countries. So

yeah, there’s takes two to tango. But hey, this has been

episode 94.

It does. It does take two to tango. But you have to ask has

the US foreign policy over the last 30 years that’s gotten us

in a new Cold War with Russia? Has that been a successful part

foreign policy? They have undermined all the good work that

Ronald Reagan and Gorbachev did together to end the Cold War. We

are back in a new Cold War. And you need to find some blame.

Putin has some blame, but so does the US State Department. So

does the US Department and Europe, Europe has a big part of

the blame to hear because he’s their neighbor. Yeah. For the

sultan of science, the rain man and Reagan library chairman, are

you the chairman of the Reagan library? Let me ask you this.

When you were a kid, did you have a Reagan poster in your

room? Have you ever owned a Reagan poster?

I’m sure I’ve definitely owned a picture of Reagan and

Ronald Reagan. Listen, Jason,

did you ever hang around Reagan poster or a picture in your

dorm at Stanford? Yes or no?

Listen, Ronald Reagan, that’s a yes. Hold on a second. Ronald

Reagan won the Cold War without firing a shot. He gave us the

greatest economy the US has ever had. He ended the inflation and

stagflation in the 1970s. And again, he avoided getting us

into any of these major wars. Tell me the politician who you

can have lunch with anybody who’s the politician who you

revere, who has a track record like that?

Um, yeah, I mean, I, I guess one would say Bill Clinton, you

know, would be the closest, you know, great president of our

lifetimes, right? You would agree with that?

I think he was a good, good president, especially number

two behind Reagan. And I remember he benefited from the

economy that Reagan, whatever reason you would agree with me,

Clinton is right behind Reagan.

Reagan and Clinton in since like 1950, something easily top two.

Yeah, easily, easily. It’s hard for sacks to say.

Eisenhower is very good. But head and shoulders, I think,

like for practically what they dealt with at their point of

time. Amazing.

All right, listen, sacks. I know you love Reagan.

And Reagan and Nixon, Reagan and Bill Clinton,

one on each side of you for next week. Will you do that for

us? I gotta go guys. I gotta go too. All right. Love you,

sexy. I love you all next time. Bye. Bye. Love you too. Happy

birthday to me. Thanks, bro.

We’ll let your winners ride.

Rain Man, David

We open source it to the fans and they’ve just gone crazy with

it. Love you.

Besties are gone.

We should all just get a room and just have one big huge orgy

because they’re all just useless. It’s like this like

sexual tension that they just need to release somehow.

What you’re about to be.

What you’re about to be.

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