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all right everybody welcome to episode 94 of all in this is a summer unprepared episode there's not much news we're
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gonna wing it with me again in his uh golfing cap the rain man himself david sachs you do okay buddy yeah
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that's good yeah all right i'm kind of annoyed that we're taping on a wednesday you know this is a slow news week it's a
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slow news well that's not why we're taping on wednesdays because you have to want to go to burning man well whatever
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i mean listen everybody has to get their burn on sex have you ever been to burning man yeah i've been before did
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you like this was that burning man really he was there on threesome thursday i've been a couple of times i think it's
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uh it's a cool experience doing worth doing you know once or twice in your life it's not
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something i want to do every year but um i know a lot of people do like doing it
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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
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go at least once have you been uh no freeburg have you been i've not been now i have no desire no i don't like driving
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in the car for a long period of time and well by the way i'll tell you i'll tell
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you why i don't really have a huge desire to go i uh i don't really have a huge desire at
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this point in my life to want to do a ton of drugs that's not that's not just about that really
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no really exactly what it's really about is art are we joking right now it's if you like art and you like music
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it's amazing it's amazing i really i really like art i think i actually collect phenomenal art in fact i like to
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go to like freeze the biennale it would blow your music no you have no idea the scale of
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the art there is tremendous it is extraordinary and if you're into music can we just can we just call it what it
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is it started out as a festival that did celebrate art and creativity yeah and over time became mass market and in
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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
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more honest that it's super fun you can really rage for a weekend or for an entire week
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and people should enjoy themselves but let's not like have to put all these labels about how like intellectually
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superior it is and how you feel like [ __ ] i don't think it's just people doing really it's okay it's okay to go
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and do drugs the thing that's interesting about it is it's really about community a large number of people
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get together they build cancer do drugs no in a community no you've never been you would
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literally that's not the vibe there the vibe is really dancing and creativity and art and community but anyway so it's
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like a rave it's where everybody is on drugs are the best when you're sober best best
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you have to understand that they're going to be going to edc sober i've never been to edc but this there's a
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great filter here which is you've got to drive six seven hours into the desert and you have to survive you
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have to bring everything with you and bring everything out you know whatever it is a bathroom water food and it is
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harsh i mean it's a hundred plus degrees in a day and it's 40 degrees at night it's not easy to survive it's hard it
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used to be that way when i went home when i went i went with a bunch of guys who had the whole thing like wired in
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and they had like these yurts and it was like a whole community and they had like
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running water and a kitchen and it was basically glamping it was glamping there are people how's that hard to survive no
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they're i mean it's hard to do there are people who glam it is hard to do that because you have to you have to go
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yes they spent the whole year whatever setting it up and it was really elaborate and then there was an article
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like in the new york times basically saying that you know that they were ruining burning man
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because they were making it too nice that was part of the problem you remember this that's when i went i went
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to the two nice experiences so they wrote that about you yeah yeah basically great you ruined burning man great time
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saks thanks for ruining birdie man [Music] [Music] i don't know if you've been following
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the nft story we'll cue that up as our next story uh open c the marketplace the ebay of nfts if you will the volume has
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dropped 99 since they first peak of 406 million dollars in a single day on august 28th volume dropped to around
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5 million dollars down 99 according to decentralized app tracker dap radar on a monthly basis open seas volume has
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dropped ninety percent according to dune analytics the floor price of a board ape
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has now dropped by 53 percent uh if you remember openc raised 300 million at a 13.3
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billion dollar valuation december 2021 in a round led by kotu in paradigm to put that in perspective that was nine
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whole months ago my how the world has changed fredbear what's your take on nfts and
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this whole boondoggle i don't know how to how will we look back on it yeah i don't know i mean we've had a lot of
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bubbles as a species this is just another one i thought we're going to stop doing
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stock market crashing stories well this is different this is a different market what do you think did you invest in any
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of these nfc month of this story which is fill in the blank asset class crashed yeah this one scene
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the question i have here sax is do you think that this is the end of the category though do you think that's like
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category ending do you think there was ever anything interesting here because you took you heard a lot of pitches like
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i did for how nfts were going to change everything you know what i'll i'll say something because i liken this to the
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point um 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
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past but like what differentiates humans from all other species on earth is our ability to tell to communicate and tell
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stories a story is like a narrative about something that doesn't exist and by telling that narrative you can create
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collective belief in something and then that collective belief drives behavioral change and action in the
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world right i mean everything from religion to government to money to art is all kind of driven all markets are
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driven by this notion of narrative and collective belief that arises from that narrative so when you go to an art
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dealer and you have a sit down with an art dealer you might appreciate the art but then the narrative begins and the
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narrative is this artist did this and they came from this and the artist that looks like this created at 6.8 million
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and this artist is only trading for 3.2 million and the whole narrative takes you away into okay i should pay 3.2
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million for this piece of art and ultimately it'll be worth more and that's the fundamental premise of
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markets is you're buying into something not necessarily always and this is such a minority now it's scary used to be
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that you own a piece of a business or a productive asset you pull cash out of it hopefully you get more cash out
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than you put in when you buy it nowadays markets allow you to trade therefore the
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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
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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
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money from that and this has been repeated a thousand times over it's been repeated in the ico tokens it's been
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repeated in the tulip bubble it's been repeated in every art market and subsidiary of
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every art market since the dawn of time since the dawn of of markets and i think
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the nfts are really just one more kind of example where this beautiful narrative has formed the the
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digitization of art but it is no different than any other form of assets that we tell ourselves the story around
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and we convince ourselves that i'm paying something today and someone else will pay something more for me tomorrow
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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
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market where there's supposed to be more rational behavior that ultimately the cash flows of an asset you're buying
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should generate more for you than the money you're spending to buy that that asset and ultimately you can maybe trade
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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
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spend y and i'll make money on the stock with no underlying assertion of what's the productivity of that business what's
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the return on cash gonna be based on the cash flows coming out of that business over time or any of the fundamentals
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around it and so so much of our discussion and distortion has really been driven by this narrative fueling
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and i think the nfts are an example but there are many others and we're going to
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see many more as long as humans have the ability to communicate with each other any do you have any take on it jamal i
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think freeberg's mostly right like i do think that there's this thing the the burning man coachella example
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is the best way to describe this a lot of these things are the same but when a few people approach something
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early they're too insecure to admit that it's the same as something else and so they
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spend a lot of time trying to tell you a narrative about why it's totally different
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the buffett example you know would be the quote you know whenever somebody tells you that this time is different
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it's probably not that different or the other quote that's well worn in history is like you know
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things don't necessarily repeat in history but they rhyme all of this is trying to say that
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other than like fundamental leaps of science there's not a lot of stuff that's new in the world you know we are
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repeating things over and over and one of the things we repeat is the social capital that you get
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from having certain choices and then getting other people to validate those choices because you want
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to feel like you're you know worthwhile and this happened in nfts and i'm sure in the first phase of different
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movements in art that also happened it's probably happened in a bunch of other markets as
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well so these things are more similar than they are different coachella and burning man the same nfts
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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
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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
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either to this california fast food wages story or we can go to goldman sachs workers
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are quitting on mass because goldman sachs is saying you got to come back to the office five days a week
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where do you want to go boys i think the california thing is really interesting just the
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the three things that california did in the last week i don't know if you guys saw but number one is they
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basically uh said that you know you have they're going to ban ice combustion engines i think by 2035.
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so you have to be battery ev um and then you have the new sales you can still have sales sorry yeah new
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sales um which is the first in the country to do it and just to go back to a second
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california is the largest auto market in the united states and effectively you know trump and
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california got into a huge spat because california had certain emission standards
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that were tougher than the rest of the united states and you know the federal government tried to sue california and
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back and forth all of this rigmarole so california's always sort of led on climate
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that was one thing then the second thing is they said we're going to create you know a state
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sponsored organization to set the minimum wage rates for fast food workers pause what we think about
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that and then the third thing is that um this congresswoman i think or this assembly person buffy wicks
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passed the law um through the senate and through the the house that essentially holds social
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media companies liable for the mental well-being and the mental health of kids um
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and depending on where you're lying on all these issues it's like an interesting
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kind of lens in which where like california is really becoming extremely extremely um
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legislatively active and basically imposing their will on free markets in the economy there yeah and for people
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who don't know the fact the fast food issue was they want to move to a more european style where instead of unions
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debating with individual corporations mcdonald's burger king whoever what they're going to pay their employees uh
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or employees uh having that discussion one-on-one they want the state some state authority to pick the amount
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per hour fast food companies pay and then i guess disintermediate the unions uh it's kind of confusing but
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interestingly uh of uh our friend uh lorena gonzalez if you remember she's the one who told elon to you know f off
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um and was a former uh democratic legislator she introduced the bill when she was in
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the assembly and so it's kind of a weird approach uh i'm not sure why the government no
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it's not about it's not it's not discriminating the unions she lorena gonzalez fletcher i guess now she's the
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former democratic legislature who drove elon out of the state remember when she said sure you know f elon
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now she works message received yes and he left uh great great move for for the state so she is now running one of the
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biggest unions and what she said is that this bill will move california closer to
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the labor model used in europe where unions negotiate the unions are still negotiating for wages and work
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conditions but in an entire sector with some sort of government board rather than company by company so in other
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words it's too slow to unionize you know company by company they would just want to unionize entire sectors of
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the economy now the thing that's really crazy about this minimum wage proposal is that
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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
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government agency that's going to regulate fast food the fast food industry you know they're not going to
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stop at minimum wage it's going to be work conditions so now you're turning fast food restaurants into a highly
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regulated part of the economy and the weird thing is it's not even just all fast food it's basically chains
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that have more than 100 fast food restaurants nationally so in other words if you're a
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local operator of two mcdonald's you'd be subject to this 10 person board but if you own 20
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restaurants that aren't part of a national chain in california then you're not and so the weird thing is that some
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workers in the fast food industry could get this new minimum wage of 22 where other or as other workers who work
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for you know they're not part of a major chain would get the statewide minimum wage at 15. so it's it's um it's kind of
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unfair in that some parts of the restaurant industry are being regulated and others aren't
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is there any justification here that you can think of to not let the free market
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do its thing frudberg well if you represent the workers you're saying hey pay him 22
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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
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business that's so reliant on commodity labor and that business in and of itself is
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not as valuable as you might have thought it was before think about it this way there's a company called
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mcdonald's and then there's another company called mcdonald's labor and what happened before is mcdonald's
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employed people to do work at mcdonald's and maybe what happens in the future is
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all those people are looking left and looking right and they're like you know what mcdonald's has nothing without us
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we are the business we deserve the value so in terms of how much of the value of
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the business flows to the shareholders of mcdonald's versus the employees that work at mcdonald's
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the employees that work at mcdonald's are saying let's go do a startup and our startup is called union and our business
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that's called union is now going to provide a bunch of services to mcdonald's and those services we're
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going to start to value capture what they're doing and it indicates that maybe there's something inherently
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disadvantaged in that model and it could be that the argument could be made that
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that business in the early 20th century in the late 19th century yeah the 19th century early
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20th century and beyond that you could build a good advantaged business because there was such an eager
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hungry workforce people looking for work you people would come and work for nickel an hour or whatever and so you as
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a business owner could make a lot of money doing that you could sell a product for a dollar pay people five
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cents to make it for you but nowadays those people are looking left they're looking right they're like wait a second
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we are the business or we're 90 of the value of this business and so couple things will happen number
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one is the inherent business model of a company that's so dependent on commodity
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service is going to be flawed and challenged in the 21st century and fast food restaurants aren't going to be as
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valuable businesses that rely on commodity service are not going to be as valuable number two businesses are going
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to automate so new businesses will emerge that actually do the fast food work or do the car building work or do
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the dock loading and unloading work that are automated and they'll have an inherent advantage in the economy and
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they'll win and i think number three is that in the near term consumers will suffer because prices will go up because
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someone has to pay for the incremental cost of running this unionized business and that will ultimately be the customer
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of that business i'll say the fourth point is i am concerned about this sort of behavior in regulated spaces where
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the government has actually control over the market itself so this a good example
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of this is the you know we had um our friend ryan from flexport on a few times but you can't just start up a
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shipping company and have a dock the docks are run by the cities and they're run by the state and so those docks
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access to those docks access to that market is regulated by the government so then what happens is the union right the
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the labor company can actually have regulatory capture through the government of a segment of the economy
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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
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reliant on a commodity labor force and commodity service and they all band together and start a startup i mean
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that's what we do we all start a company yeah and go and compete but the issue is
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then when the government creates regulatory capture over a segment of the economy and make it difficult for the
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free market to ultimately do its job of either automating or creating a newly advantaged business model or all those
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things that allow us to progress automating's coming a couple of us made a bet on a crazy idea of like automated
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uh robotic coffee called cafe x uh not to talk our own book here and the company
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really struggled during the pandemic but they have two units at sfo jamal they're
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doing 73 000 in two units last month and i'm like wow the the company figured it
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out and there's another company doing french fries this is the this is the sad thing that california doesn't realize is
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like i think that the folks writing these laws have just an extremely poor understanding of economics
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and capitalism because the first thing that it does effectively and everybody can understand
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this is it caps the profitability of a company right because it effectively says if you
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look at an industry that is over earning then this council will essentially see money that should be reappropriated to
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employees now that idea is not necessarily a bad thing for example you see that all the time in
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technology right if you look at the ebitda margins of like big tech and how they've changed they've actually
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eroded over time as the companies have had to generate more revenue because employees demand more and more
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of those gains that's an implicit part of how the free market economy works in technology so you know if you
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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
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so there's a natural effect of people being able to do that in certain markets but when you impose a margin and
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essentially say you can only make 10 because the rest of these profits i'm giving to these folks because i've
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imputed their new wage to be something that's much greater than what they were paying
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before the unfortunate thing is what freebrook said which is that you will rebuild that
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business without those people because it is the rational thing to do and so unfortunately what you'll do is
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you'll take a bunch of people that should be in the economy right think about like new immigrants or young
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people that are first getting on their feet they'll take these jobs you know i mean
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i worked at burger king when i was fourteen that's how i got somebody first you you those jobs won't be there to be
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had and that has ripple effects as these folks get older or try to get more ingrained in the
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economy and this is what i wish california would understand is that these things aren't free and even though
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they seem like you're coming to someone's rescue there's all kinds of unintended
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consequences and very obvious consequences that you're ignoring by not really understanding how the
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economy works i'll just say like look these people can i'll start a sec but i mean you know the people that are
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elected are elected by the people to represent the people they're not elected to govern
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over the long term plan necessarily for the state and while you think that those
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two may be the same the near-term incentive and the near-term motivation of someone who's voting is i want to get
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a benefit for myself sooner rather than later not necessarily i want to make an investment for 30 or 40 years down the
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road and if you're an individual that's struggling in some way you're going to prioritize the former over the latter
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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
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necessarily raise my hand and say i blame the people that have been elected i raise my hand and i say look this is
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the natural evolution of what happens in a democracy where there is a struggling
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class and there were where there is some sort of view disparity or considered disparity that this is what's going to
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happen in a democracy under this condition is that you're going to elect individuals who are going to go and
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govern and they're going to make decisions they're going to benefit those individuals that got them elected over
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the short term and there may be some real long-term damage that results saks is a part of this problem is that
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uh people are now looking to the government to solve their problems in life versus
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maybe looking internally to solve their problems and you know negotiate better salaries and hold on i think you have to
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give people a little bit more credit nobody was asking for them to step in like this look this is as much for the
00:22:33
politicians as it is for any of the workers um what's happening right now the national restaurant association and
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all these restaurant lobbying groups are flooding the state the legislators the governor with lobbying money because
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they want to get this bill modified tempered or thrown out and so this is basically a racket like
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look as a public policy matter it makes zero sense for the same worker if they go work at say
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jiffy lube or something outside the wrestling industry they get the california minimum wage of 15
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if they go to a mom-and-pop restaurant they get the minimum wage of fifteen dollars but if they go to mcdonald's
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they now get a new minimum wage specifically for chain restaurants of twenty two dollars that simply makes no
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sense there's no public policy rationale but the real question you have to ask and
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trump is kind of getting at this is why shouldn't it be fifty dollars why shouldn't it be a hundred dollars well
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the reason is because if you raise the minimum wage too much then these um employers have a huge incentive to
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replace that labor with automation and so the unintended consequence that your mouth is talking about is that these big
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chain restaurants are gonna rely even more heavily on automation now and they're gonna basically employ less of
00:23:44
this labor where the price has been artificially erased for that sub-sector of the economy from 15 to 22 for reasons
00:23:51
that no one can really explain so again this is not for the benefit of workers it's for the benefit of the politicians
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look what's happening right now there's all these articles talking about the lobbyists coming in they're going to
00:24:02
nav gavin newsom begging him to be their savior right now and this is the game that the california democratic party
00:24:08
plays it's a one-party state where they where basically business loves gavin newsom because he's their protector he's
00:24:14
a protection end of the extortion racket lorena gonzalez gets this bill passed which is basically incredibly damaging
00:24:22
to these chain restaurants and they have to go running to gavin newsom and beg him to either veto it or modify it
00:24:28
temper the bill so it's not as destructive to their business he's a protection in the extortion racket but
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it's the same racket this is a one-party state and what they're doing with chain
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restaurants they would do with every sector of the economy if they could it's just a matter of time
00:24:42
and what is the purpose of the california government like are there things they could be focusing on other
00:24:47
than this like maybe the free market settles this issue and they can extract benefits from the private sector from
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basically the wealth producing part of the economy and to line their pockets in the pockets of their supporters you know
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that the typical government worker in california makes 53 percent more than their private sector or counterpart and
00:25:06
if you factor in all the pensions that have been promised it's a hundred percent more okay so basically there's a
00:25:12
huge wealth transfer that's taking place where the where basically the legislatures the party they are
00:25:20
transferring wealth from the private sector to their supporters their backers and friedrich you talk about democracy
00:25:26
listen i mean california is a one-party state and ballot harvesting is legal here i'm not
00:25:31
saying the votes are fake or anything like that but there's a giant party machinery and apparatus that literally
00:25:36
just goes door-to-door and collects the ballots from their supporters they literally know who their supporters are
00:25:43
on a door-by-door household by household level it has gotten to the point now where the party machine is so powerful
00:25:51
they can pretty much run anybody for any post and get them elected it's very hard
00:25:56
for an outsider candidate it does feel like people are getting tired of it no but guys that's exactly
00:26:02
how it works i mean like if you look at gavin newsom's run to the governorship um he paid his dues he did the right
00:26:09
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
00:26:16
had some pretty big moral transgressions it didn't matter because it is about paying your dues and waiting in line
00:26:22
because there aren't any meaningful challenges here none i'll tell you so in l.a
00:26:28
l.a in l.a right now there's a mayoral race going on and the two there's a runoff between rick caruso and and karen
00:26:34
bass it karen bass is basically a product of the political machine she's basically
00:26:39
worked her way up in the democratic party forever sort of uninspiring candidate she's just basically a puppet
00:26:44
of the machine caruso is actually he's a real estate developer who's built some of the
00:26:49
most landmark you know spots in la like the grove like the pacific palisades development he's
00:26:56
made incredible he's created incredible amenities for the la area he's also been on a bunch of
00:27:03
civic boards um you know i had lunch with him at the grove and people were coming up to him he's like a celebrity
00:27:09
they were taking photos with him he's the best possible candidate that you could have in a place like la
00:27:15
he actually understands business i think he would restore law and order i mean all this kind of stuff right he's spoken
00:27:21
out about the homeless problem being out of control and on election night he had the most
00:27:26
votes but five days later when they counted all the the basically the collected ballots
00:27:31
through ballot harvesting karen bass was up by like five points that is the power
00:27:35
of the ballot harvesting and i still hope that he wins but the party machine is so powerful they can basically get
00:27:43
almost anyone elected in the state can't the battle what's that just devil's advocate here
00:27:50
the the ballot harvesting can work both ways like you could go collect republican votes
00:27:54
no but you have to have the party infrastructure to literally go back okay so the republican hasn't the republicans
00:27:59
haven't done that think about it this way okay so you know like your phone there's a
00:28:05
platform and there's an app think about the party as the platform and the candidate as the app okay the platform
00:28:12
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
00:28:18
build his own operating system exactly so he has to build his own platform then he has to build his own
00:28:24
candidacy so when you think about the amount of money that's required to do something like that about how hard it is
00:28:29
to do it it's it's very very hard so he spent something like 100 million of his own
00:28:35
money hopefully he wins but if he doesn't all the infrastructure all the platform that he created just goes away
00:28:42
and then the next candidate has to start from scratch this is why outsiders is almost impossible why isn't the gop
00:28:47
invested in california they just don't think they have any shot because it seems like the the democrats are
00:28:51
investing heavily in trying to flip you know um look there's a two to one party affiliation there's a two to one party
00:28:57
affiliation in california towards democrats so look i mean the republican party here is a mess and that's part of
00:29:03
the problem is the republican party in california needs to move to the center it's a plus 30 blue state unless they're
00:29:09
willing to do that they're not going to make progress but that could take you know generations to fix and with roe v
00:29:15
wade and that kind of stuff it's going to be really hard to look there are pro-choice republicans in california but
00:29:21
all newsom has to do is point to what's happening in texas and you know all of a sudden people kind of
00:29:28
revert to their tribal political affiliations i'll make i'll make one more simple point the average voter in
00:29:34
california probably knows more people that work at mcdonald's than our shareholders of mcdonald's
00:29:40
and i think in any time that there's policy that gets voted or gets suggested or ultimately gets passed there's a side
00:29:48
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
00:29:54
probably going to be supportive of that policy and i think that's probably a pretty simple rubric for thinking about
00:29:59
how these things over time evolve that's true nationally why is that only true for california
00:30:06
i mean like in florida yeah first person in florida knows more people who work at mcdonald's than
00:30:12
shareholders mcdonald's and they're not engaged in a systematic takeover of the private sector philosophically they're
00:30:19
they believe in independence and businesses not being interfered by the government right that's a core tenant of
00:30:24
the republican party also the sad reality is that within a few years unfortunately you'll know a lot fewer
00:30:31
people that work at mcdonald's because the number of jobs for humans will be dramatically lower they got rid of the
00:30:37
cashiers that's gone already or what people will be more acutely aware of in a number of years is how expensive
00:30:42
mcdonald's has gotten because if the price doesn't know that that won't be because like again
00:30:47
mcdonald's has a very simple no not not even the market mcdonald's is not stupid
00:30:51
they understand how to use excel and so they'll think well i can amortize a robot
00:30:56
versus actually jacking up um prices because what mcdonald's understands is the sensitivity of
00:31:02
pricing to demand for their product yeah that's right right i mean they are the most intelligent about how they price
00:31:08
every anything at the sort of the lower end where you're capturing you know nickels and dimes they are the most
00:31:14
sophisticated and understanding supply demand and and and the curves and so to think that they're not going to just
00:31:21
invest heavily now at the corporate level the next franchisee of mcdonald's will still pay a million dollars for
00:31:26
franchise fee but will give will be given a bevy of robots that they rent for mcdonald's and they'll have to hire
00:31:31
half or a third less that's that's the real shame of this which is the number of people that
00:31:36
should actually be gainfully employed in the economy will then shrink again but in this case
00:31:42
it was because legislators just completely don't understand how incentives work and how the economy
00:31:48
works and people are not clued into exactly how well narrow ai machine learning is doing right now by the way
00:31:55
i'll say like it's really moving quickly one general way to think about this is is technology
00:32:01
is introduced and the technology creator captures roughly a third to a half of the value increment because of the
00:32:07
delivery of that technology the productivity increment so let's say that it costs 12 15 an hour
00:32:13
to employ a mcdonald's labor today and let's say that you can build technology that the amortized robotic
00:32:19
cost is ten dollars an hour there will be a technology company that will make 250 an hour off of that so net net what
00:32:25
ends up happening is productivity has to be gained and prices will reduce and so
00:32:31
you know there are moments like this where there could be an acceleration of technology and also an opportunity for
00:32:36
new industries to emerge and when that happens new jobs emerge too so it's you know maybe look i mean at
00:32:42
the end of the day it seems luddite-ish but you know there's going to be a mark a
00:32:46
market opportunity that will arise i think we need to like just step back and and ask what is the type of economy that
00:32:53
california is creating here with this fast food law with these other laws we're talking about
00:32:57
this is a state in which you have a disappearing middle class the middle class has been moving out of the state
00:33:04
by the hundreds of thousands in fact last year we had for the first time net migration out of the state this has
00:33:11
basically become a state where the only middle class are basically the government workers who like we talked
00:33:16
about are making twice as much as their private sector counterparts it's a state
00:33:20
where you have the very rich and very poor and the only middle class are government workers that is what we're
00:33:24
creating the rich in the state have done really well over the last few decades why because of globalization so you take
00:33:31
the two big industries in the state tech and hollywood entertainment they have benefited enormously through
00:33:37
globalization because now you can sell software or you can sell movies or music exactly so now these these industries
00:33:44
have become you know massive global exports and so if you're in those industries in
00:33:50
california you've done really well because now your market is the whole world so the super rich have done really well
00:33:58
that's funded the state that's allowed the state it's almost like a resource course to have all these bad policies
00:34:05
that really hurt small business owners they've been moving out of the state and so again you've got the very rich and
00:34:10
very poor this is not an economic model for the entire nation this is what you know gavin newsom says he wants to take
00:34:16
to all of america this is not a model for all of america in order for democracy to function we need a thriving
00:34:22
middle class and this is not a recipe for delivering a thriving middle class to america and
00:34:29
the i just want to show you guys a quick video um we'll just play for five seconds here we had invested in this
00:34:35
company and got sold i'm not going to say the name of it but if you watch this quick robot
00:34:41
this is a computer vision company out of boston and like they're doing high-speed
00:34:46
picking of tomatoes and berries like this is a two-year-old video when we invested and
00:34:51
wound up getting bought by another company and they're doing vertical farming but
00:34:56
and there's companies doing this now for french fries it's over like we are within you know i think five ten years
00:35:03
of a lot of these jobs and we're talking tens of millions of manual labor jobs being gone and and we're going to look
00:35:09
at this moment in time where we try to squeeze an extra 10 or 20 percent out of these you know uh
00:35:17
employers and then you're going to see these employers say you know what 24-hour day
00:35:21
robot yeah it's a little bit upfront cost i'll put it on a lease and they're just going
00:35:26
to move to these robots it's it's really very close to being game over for manual
00:35:30
labor and you can see it also with cyber truck and you know what elon's doing with ai
00:35:35
and these things are getting so close and it's been i don't know when did you invest in your first
00:35:42
robotics or ai company saks or chama do you remember the first robotic or ai company you invested in and how long ago
00:35:48
was 2014 [Music] it's a company called relativity space which is 3d printing rockets and engines
00:35:59
and basically they're able to use machines to learn how to actually fix the morphology of
00:36:04
all the materials that they use to print better and cheaper and more useful rocketry that's an example but then that
00:36:10
led me down the garden path i was just going to say something more generic instead of talking her book which is
00:36:18
i think people misunderstand that moore's law has actually not ended um and this is something that
00:36:30
a friend of mine adam deangelo characterized to me a beautiful human being from work
00:36:36
together he well he was a cto facebook when i worked there so we this is you know we we've known each other for 15 16
00:36:41
years and now he's a ceo and founder of quora but you know the the way that he described it to me which is so true the
00:36:48
minute he said it i was like my gosh it's like moore's law never ended it just shifted to gpus
00:36:53
you know because the inherent lack of parallelization that cpus have you solve the gpus and so that's
00:37:00
why the the surface area of compute of innovation has actually shifted json to what you're saying which is you know
00:37:07
all of these new kinds of machine learned models because you can just now brute force and create such a tonnage of
00:37:14
compute capabilities and resources to solve these problems that weren't possible before so
00:37:20
you know you see this thing you know fun things like wall-e or you know dally sorry
00:37:26
and more sophisticated things like gpt3 but he's right which is that you know we
00:37:31
are at a point now where all kinds of expert systems which is sort of like v1 simple forms of ai
00:37:37
are going to be completely next level well you think about the data sets adding to that and so when gov exactly
00:37:43
and so when governments don't understand this and they try to it you know step in
00:37:48
they're going to be shocked at how much faster they're pulling forward the actual future they actually are trying
00:37:52
to prevent yeah the the data sets is the other issue fredberg you look at you know the
00:37:58
the data sets that are available to train so you have the gpus still escalating massively the amount of
00:38:05
compute power can do you have cloud computing at the same time and then you have these data sets one of the most
00:38:09
interesting things about you know dolly and a lot of these is the corpus of data
00:38:13
they're able to absorb and a second factor issue that is starting to come up is who owns the derivative work
00:38:20
in copyright so if you train your data set on a bunch of images and those images
00:38:25
are owned by disney or whoever you know photographer getty and then the ai makes
00:38:30
you a new photo so here's another here's another example of this here's another here's another example of this in a law
00:38:36
that just passed so in the ira uh the inflation reduction act you know we granted
00:38:42
cms and medicare the ability to negotiate drug prices and we actually also capped
00:38:48
um the total prescription costs that any american can pay at two thousand dollars
00:38:53
now it turns out that overwhelmingly most americans will never spend two thousand dollars a
00:38:59
year on prescription medications but there will be a few and they bump up against drugs that cost billions of
00:39:05
dollars so there was a you know there's a drug for you know uh sma um that's like you know 2.4 million and like you
00:39:13
know beta thalassemia like 2.8 million and you're and and we will all bear the cost of that now
00:39:21
if cms and medicare go and really crunch those costs what is pharma going to do well pharma is going
00:39:29
to do what is the obvious thing which is like if you're going to cap what i can make i
00:39:35
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
00:39:41
do is potentially put a bunch of research scientists out of work and those are folks that
00:39:47
should probably in the you know for our general future be gainfully employed but
00:39:52
the nature of their job is going to change completely because the economic capitalist incentive of big pharma is
00:39:58
going to move towards technology which is you know an alpha fold and their protein library is the
00:40:03
equivalent of ai and automation for mcdonald's so this is where again governments have to
00:40:09
be super careful that they understand what's actually happening because they're creating incentives i think that
00:40:13
they don't completely understand all right we can go to raw meet for sax zuckerberg's uh admission of fbi
00:40:20
meddling truth social uh well you guys disputed me and like how dare you imply that j
00:40:27
edgar hoover and jim comey's fbi is politicized remember you guys were debating against
00:40:33
that was about the investigation you didn't but some of you were saying i can't believe saksa you're part of the
00:40:38
35 of americans who don't believe fully in the rectitude and integrity of the fbi
00:40:46
i don't know if this is fbi oh man comes this bombshell i mean you gotta admit this was a
00:40:51
bombshell what was the bombshell okay so i'll okay okay so joe uh joe rogan had zuck on and he asked him about
00:40:58
this very specific thing remember the new york post story on hunter biden's laptop in like the week or two before
00:41:04
the election was censored right and it was a very controversial thing because the fbi was dealing with known
00:41:11
uh russian interference and hacks and all this stuff uh part of which trump was like asking people to hack other
00:41:17
candidates okay you're not even setting this up correctly well okay i'm gonna keep going and then so this is what
00:41:22
zuckerberg said hey look let's see let's moderate this segment well i mean i'm just gonna read the federalist which is
00:41:28
you know right wing but he says i'll just read you what zuck said because that's says it all he says hey look if
00:41:34
the fbi which i still view as a legitimate institution in this country i'm quoting from the federalists which
00:41:39
is quoting him from joe rogan um it's a very professional law enforcement they come to us and tell us we need to be on
00:41:44
guard about something i want to take it seriously so uh when the new york post broke the hunter by the laptop story on
00:41:50
october 14th 2020 facebook treated the story as potentially misinformation important misinformation for five to
00:41:56
seven days while the tech giants team could determine whether it was false or not during that time uh this is federal
00:42:02
speaking decreased its facebook decreased distribution of the story by making the story rank lower in
00:42:09
the news feed and this is his quote zuckerberg's you could still share it you could still
00:42:15
consume it zuckerberg explained but quote fewer people saw it than would have otherwise
00:42:22
and while he would not quantify the impact the facebook founder said the decreased distribution was quote unquote
00:42:28
meaningful in a follow-up rogan asked if the fbi had specifically said quote to be on guard about that story
00:42:36
meaning the laptop story after originally responding no zuckerberg corrective says i don't remember if it
00:42:41
was that specifically but it was basically the pattern so basically i guess you would agree sax zuck didn't
00:42:46
know exactly what to do here with this information um and if it was real or not which you
00:42:51
know it turned out to be very real and it probably could have swayed the election i mean i do think if
00:42:57
people thought there was a connection between hunter bind maybe it could have i don't
00:43:03
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
00:43:08
this specific thing what should the fbi do if these kind of hacks are getting released of people's families
00:43:14
okay so yeah here's the complicated issue right there's many vectors yeah what zuck basically says the fbi came to
00:43:20
to them and encouraged them to suppress this story or to suppress a story that they described that would be just like
00:43:27
this okay so now look a lot of conservatives are dragging zuckerberg and facebook for
00:43:32
doing for doing the fbi's bidding but i think a lot of people i think most people in zuckerberg's
00:43:37
position would have believed the fbi when the fbi comes to you and says you're about to be targeted by russian's
00:43:43
information you need to do something about it you would have listened to the fbi he believed the fbi
00:43:49
my point and so i don't blame facebook too much for that i think it's understandable that he would have
00:43:53
believed them the issue here is the politicization of the fbi look let's back up what was happening so the new
00:43:59
york post gets this story about the leak contents of hunter biden's hard drive in
00:44:04
response to that you had 50 former security state officials many of whom were democratic partisans
00:44:13
like clapper like brennan they signed a letter saying that this story has all the hallmarks of russian disinformation
00:44:21
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
00:44:28
that we thought that the social networks and so forth censored the story okay now it turns out that the fbi by the way
00:44:36
the fbi had the hard drive they had the hard drive for over a year it was an image of the hard drive or the actual
00:44:41
hard drive they had the actual hard drive the leak of the story was was likely prompted because the fbi
00:44:48
didn't appear to be doing anything with the hard drive so somebody leaked the story
00:44:53
to you know to rudy giuliani and then he leaked and so forth the new york post but the point is that the fbi had the
00:44:59
hard drive so they knew it was authentic okay so they knew that this hallmarks of
00:45:04
russian information was not the truth because again they had the authenticated hard drive in their possession and yet
00:45:11
they still went to zuckerberg and basically played into this narrative this phony narrative
00:45:17
that you know democratic partisans like clapper and like brennan had created was
00:45:22
there anything meaningful by the way about what was on the laptop in your mind like do you think it's relevant do
00:45:27
you think we want people's laptops being hacked like this who are in people's political families
00:45:32
yeah i don't think the laptop was hacked i mean there's a weird convoluted story
00:45:37
about how the laptop ended up but but look the the point of people's personal pictures you know and stuff like that be
00:45:43
released i never liked the part where they were showing uh hunter biden's you know drug use and
00:45:49
the other personal stuff i thought that was scarce and i didn't i didn't like it and i
00:45:54
didn't think that was uh particularly germaine so i think and i think it was an invasion of his privacy however there
00:46:00
were materials on there related to his business dealings in ukraine and i don't say see how you can say those weren't
00:46:06
relevant oh i think they're trying to relational he's being investigated for them too now i mean a lot of this has to
00:46:11
do with timing too you know it's like how do you deal with something like this seven days before an election when you
00:46:16
know the russians are hacking it if it has been or not it's a really difficult situation for everybody i think so so
00:46:21
look my point my point is this that um i i can agree with you about the personal
00:46:25
stuff about hunter buy and shouldn't come out but but with respect to the ukraine stuff that was legitimate it was
00:46:30
fair game and the in most importantly i don't know whether it would have sworn the election not probably not probably
00:46:36
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
00:46:43
was true because they had the laptop in their possession they should not be intervening in elections that way that
00:46:50
is the bombshell here that's unbelievable i i think they didn't know the providence of this but i guess we'll
00:46:55
find out where are you landing in the providence of a hard drive that's in their
00:46:58
possession i didn't have an nft exactly um where do you how are you uh i think you always start culture exactly
00:47:06
that's exactly audience wants to know saks audience really wants to know where you were going to reserve judgment on
00:47:11
the mar-a-lago search where do you and or republicans come out on all this now when you see
00:47:18
[ __ ] he did in fact have a ton of really sensitive stuff like it'll define a ton and of defined terms of really
00:47:25
sensitive stuff yeah i mean listen like what's your what do you have 300 pages of documents mark classified
00:47:31
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
00:47:38
pages that have classified markings on them well the fact that he wouldn't give it back
00:47:42
by the way i never disputed it hold on a second i never disputed that they would find documents with
00:47:47
classified markings in trump's basement i still think that the approach was heavy-handed and we don't know enough
00:47:53
because we don't know what those documents are yeah every document they stick in front of
00:47:57
the president or not every but many of them are more classified but okay so let me ask you this aside from these like
00:48:02
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
00:48:07
motivation was i mean i have my own theory which he likes memorabilia he's always liked to show off i think that's
00:48:12
it i think you got it i mean honestly if i had to guess what this whole thing was
00:48:15
about it's probably that the archivist at the national archives wants the original copy of those letters with
00:48:21
little rocket man and he doesn't want to give him up right yeah i really think that's what this is about i think it's
00:48:27
about something as silly as memorable memorabilia i think it's about memorabilia i do not think these
00:48:32
documents pose a threat trump just give it all back it's so dumb but why would the fbi feel the need to
00:48:38
do a race by the way remember when we first discussed this one second when we first discussed this
00:48:42
issue we were told it was nuclear it was nuclear secrets could be yeah no they've
00:48:48
backed off that completely it was not in the affidavit it's not about nuclear that was something they leaked to get
00:48:53
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
00:48:59
never to defend trump per se my real concern is the politicization of the fbi our law enforcement agencies should not
00:49:05
be weaponized by either party to pursue their you believe they are at this point and
00:49:11
we just saw with the zuckerberg thing what business did the fbi have going to zuckerberg to get them to censor a new
00:49:18
york post story that turned out to be completely true hold on a second that is election interference they should not be
00:49:23
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
00:49:29
by the way the government of the united states has no business censoring a free press that is a violation of the first
00:49:36
amendment when the government instructs a private company to censor a press story that the government itself
00:49:44
does not have the authority to censor that is a violation of the first amendment we thought remember when jack
00:49:50
dorsey said that he regretted the censorship that twitter did and he came out with that apology we
00:49:55
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
00:50:02
these big tech companies like twitter like facebook they're gonna have to have a new policy which is when the
00:50:07
government says we want you to censor something their response needs to be show us a court order they do not just
00:50:15
censor now based on the say-so of some operative framework i would agree with you i agree with you
00:50:20
on that i think it was a bad decision obviously the one big tech company that really
00:50:25
nailed this i think was apple you know very early on they drew a really hard line in the sand
00:50:30
with the san bernardino shooter because they said if we allow the fbi to get into this
00:50:36
person's phone even though you know what he did was completely heinous we are going to create a back door that
00:50:42
will become an exploit for everybody and we are drawing the line on privacy and security now different set of issues but
00:50:49
it just goes to show you there have been a few examples where some of these companies have drawn a
00:50:54
hard line and then in that example and i think jason you mentioned this they went
00:50:57
to israel and had that company hacked the phone okay whatever but it didn't come with um
00:51:04
they were able to stand up to the pressure so i think there are some example stats where you you can say no i
00:51:09
mean the the idea that twitter would block a new york post url it's like ah such a jump
00:51:16
ball like if it was the sex material i could understand them saying like you can't hack it that's against our terms
00:51:21
of service for and we agree on that sex but in this case like i i don't know let's go to something more interesting
00:51:26
cause well heat wave i think and the drowning i know this is interesting to sacks but i think it's interesting to
00:51:30
everybody else in the audience uh heat waves and droughts are uh just flash is hot in summer
00:51:36
yeah i think this might have to do with global warming and be a little unique just i'm kidding i'm kidding
00:51:42
before all the esg people get into sex and say you know you're a globe and then we'll come back around and give
00:51:58
you your raw meaning what's your what's your what's your point of view on climate change the impact it will have
00:52:04
on the planet and whether like urgent action is needed listen i'm not an expert in that area
00:52:13
i'm not going to pretend to be i do think that um that we can't save the planet by destroying the economy
00:52:21
and it seems to me that too many of these save the planet people like want to take reckless extreme actions that
00:52:28
would wreck our economy you just saw actually elon just gave a talk this and made news this past week from norway
00:52:36
where he said that we still need oil and gas he's the leading innovator in basically moving i don't
00:52:42
disagree and he said listen unfortunately we got to rely on oil and gas because it's too
00:52:47
important for civilization if we cut the stuff off too quickly we end civilization yeah so look i mean i think
00:52:54
this is a long-term problem but and i think we need to have long-term global warming just full stop
00:53:01
the planet is warming you agree with this it's not just about warming just just to
00:53:06
use a different term that there are more frequent extreme events that can severely
00:53:12
uh hurt people hurt the economy hurt the food supply hurt the energy supply all the
00:53:18
things that you know i think were like all the way on the bottom of maslow's hierarchy like
00:53:23
these are the things that are most critical that they're starting to get disrupted in a pretty severe way
00:53:29
you know i think that that's that's i mean that's the big question so sax it's i think it's becoming and this is
00:53:35
where the transition starts to happen that a lot of people kind of say hey over the long run the temperature is
00:53:40
going to go up by one degree celsius over a century you know who cares but there are the problem the problem is
00:53:47
this is that you know and by the way whenever somebody like me points out how insane some of these policies are
00:53:54
the topic has shifted to are you a denier of some science or other no listen my point is not about the science
00:54:00
my point is look at the collapse of the sri lankan economy because they implemented these esg rules on
00:54:06
fertilizer look at what's happening to the dutch farmers who are being put out of work because of esg california
00:54:12
california today governor governor newsom today said please don't use your electric power to charge your electric
00:54:19
cars a week after they said uh gas cars are now going to be banned in the state and
00:54:25
so there's a grid is going to go yeah there's a deep irony underway today in california because and fox news has
00:54:31
obviously latched on to this story that that has to do with the grid though i mean
00:54:36
look suspicious whenever whenever politicians invoke some crisis as the r as the
00:54:42
reason i'm talking about some political arguments i'm not talking about the political shock i've learned to distrust
00:54:46
it that's the point and so i'm talking about you know what's happening in europe right now is
00:54:52
obviously gas is through the roof because of the ukraine war the you know the price has basically gone through the
00:54:56
roof and so because of that they're not able to produce fertilizer and one of the byproducts of the production
00:55:03
fertilizer is co2 which gets added to the production of beer to make it fizzy well guess what
00:55:10
the germans are not only about to run out of gas they're about to run out of beer
00:55:14
you think you think they're going to keep supporting the ukraine war when they find out that there's no beer for
00:55:19
oktoberfest not not be able to eat they heat their homes they can't drink beer in october yeah
00:55:26
this is the west sit down we got we need to sit down just taking up just taking apart
00:55:33
just taking a beat for a minute like taking taking off the table the political response
00:55:39
are you as an individual concerned uh about the the impact of a changing climate
00:55:44
on people and on the economy and and are you interested as an investor in the private
00:55:50
market solutions to resolve some of those things that are obviously going to become market driven problems
00:55:56
take the government out of the equation i i think there there may be a long-term
00:56:00
problem here i'm not sure like how long it takes i definitely think i'm skeptical of this claim that
00:56:06
you know the world's going to end in the next 10 years because frankly we've been
00:56:10
hearing that since the 1990s i mean 1988 there's a great headline article by the
00:56:14
way in new york times where it was like scientists in 1988 said that all the oceans all the ice caps will melt the
00:56:21
oceans will flood the land by the year 2000. so there is a credibility challenge associated with predicting you
00:56:27
know kind of long-term outcomes like this that that continues to kind of foment unfortunately right yeah all my
00:56:33
beachfront property would be underwater right now if all that came true um no i'm just kidding but no but but
00:56:38
look it hasn't escaped my attention that many of the political leaders who are claiming that were facing an
00:56:45
imminent threat of being under water in 10 years own beachfront property and fly on private jets so obviously
00:56:54
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
00:57:00
can shove through a bunch of bad policies that are very destructive to them would you define what's happening with
00:57:06
temperature and extreme weather as a crisis or not um yeah i mean there's there's a i would
00:57:15
say there's a critical impact in um and will continue to be a critical impact in the food supply chain
00:57:23
in um the quarters and years ahead because of what we're seeing so severe drought and heat wave in china right now
00:57:31
um and by the way food is not the only one there's there's also the manufacturing supply chain so in the
00:57:36
province of shechem in china they actually lost power because so much of the power is driven by hydroelectric pet
00:57:42
plants so uh streams and water flow has slowed down and stopped as a result there's less power as a result the
00:57:48
factories are being shut down as a result key components for manufacturing in the computing industry
00:57:55
and um and in kind of mechanical goods are not being produced at the rate that they were being produced before that has
00:58:02
a ripple effect in the supply chain similar to what we saw in covent and then in the food supply chain we're
00:58:07
seeing a drought and a heat wave right now we're coming out of it in the midwest in the united states where we
00:58:13
grow corn and soybeans throughout europe and also in china and in china they had
00:58:17
70 days in a row of record-setting temperatures no water high temperatures the they're
00:58:28
just starting to assess the crop damage it looks pretty severe there was massive
00:58:31
crop damage in the midwest uh in the corner the corn belt this year um and then obviously european farmers
00:58:37
are having issues and combine that with the geopolitical issues of the ukraine crisis and the natural gas pricing being
00:58:43
so high one-third of uh fertilizer of ammonia plants have been shut down in europe and they think
00:58:50
that ammonia and fertilizer production may drop by as much as one half in europe because of the crisis so energy
00:58:56
prices are so high you can't make fertilizer so that energy is being also redirected into other industry and
00:59:01
support homes so you believe it's a crisis so i guess the question yeah people are turning on their acs in
00:59:06
california this week you know you see that governor newsome just said our grid in california cannot support excess
00:59:13
electricity consumption therefore one of the biggest variables is electric cars he's saying don't plug in your electric
00:59:18
cars this week and that's because of record high temperatures they're about to hit california in two days so look
00:59:23
everyone says hey these are kind of um anecdotal stories but no it's exactly statistically the frequency of extreme
00:59:32
things happening is continuing to climb and then the impact is in the food supply chain the energy supply chain and
00:59:38
the manufacturing supply chain and there are follow-on effects now i'm optimistic
00:59:42
that private market solutions will resolve these issues yeah that was my next question
00:59:48
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
00:59:54
crisis to solve some of these problems these are pretty economically obvious yeah and that's that's my point the the
01:00:00
private market will resolve because people want to have electricity they want to have food they want to have not
01:00:06
want to need they need and so so so the market will pay for those things and therefore producers and technologists
01:00:13
will resolve to solutions to make that happen so we just have to have the pain and suffering and see it firsthand
01:00:18
the market to kick in our friend in the group chat that shall not be named posted this
01:00:25
meme you guys saw it right which said like an autistic school girl takes what was
01:00:32
it i have it here quit school this is the dominoes you you can show the dominoes but
01:00:38
basically it said an autistic swedish girl decides to skip school is the little domino and seven dominoes later
01:00:44
this huge domino it says the collapse of europe's energy grid and without commenting on the language
01:00:51
used in the meme for a second what is the point the point is these conversations can so quickly
01:00:58
go off the rails and are not about national security and economics and quickly become about moral virtue
01:01:04
signaling that you miss the point the point in the united states just to be very blunt
01:01:09
is that the cost of electricity has gone up by 46 percent in the last decade it will go up by another 40 odd percent
01:01:20
through 2030 so between 2010 and 2030 the cost of electricity for every single american will have effectively doubled
01:01:29
even though the ability to generate particularly from wind and solar have been reduced by 90 percent now why
01:01:37
is that well it turns out that if you look inside the p l's of these utilities it actually
01:01:42
gives you the answer so over the next 10 years we have to spend as a nation just
01:01:50
just on upgrading power lines two trillion dollars this is all cap this is all like crazy
01:01:58
crazy opex right capex improvements for sunk cost investments our power line infrastructure in america is 20 plus
01:02:05
years old 30 years old our generation infrastructure is pretty poor um we have all of these failures we
01:02:14
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
01:02:20
that there's a huge economic incentive to solve it and there are practical ways to solve it and
01:02:26
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
01:02:31
to make some really stupid decisions we're going to keep trying to turn off nuclear another thing that elon said you
01:02:36
know we're we're not going to green light uh shale and that gas we don't have time for this if you
01:02:42
actually believe this is a cataclysmic issue you need to basically be okay with hydrocarbons because it is the only
01:02:49
credible bridge fuel we have to keep the world working properly because otherwise
01:02:54
what david said is right we are going to economically destroy parts of the world by trying to
01:03:00
race towards this net zero goal by the way guys i just want to take the you know rip the band aid off
01:03:06
net zero by 20 50 26 it is not possible there is zero credible plans that the world has to do it so we have to take
01:03:14
small incremental steps and many of them yeah this is that we should stay focused
01:03:20
on that yeah the interesting thing and you cannot let people guilt-trip you because this is when you make these
01:03:26
stupid mistakes like the entire continent of europe made yeah it really does which is now going to [ __ ]
01:03:33
here's the economies of that of that entire continent unnecessarily here's the good news all this virtue signaling
01:03:39
and people wanting to be green and and for whatever reason all of that now economics and
01:03:45
geopolitical is forcing people to rethink nuclear the diablo canyon nuclear power plant which is the last
01:03:52
one in california that's operational it's being voted on today as we're taping this and it's expected that
01:03:58
they're going to keep it online the governor with the great hair wants to keep it going and the fascinating part
01:04:03
about this is how choice does he have exactly and so now the awareness is so high about power and
01:04:10
us losing it and asking people to turn off their air conditioners turn on don't plug in your cars but people people
01:04:15
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
01:04:21
and they haven't changed their position since but this is interesting this guy gene nilsson
01:04:25
who's been a champion of this stuff he said i thought our chances were zero of keeping this thing open um and he
01:04:31
said what's you know and he said he told this conference of attendees nuclear conference
01:04:38
that the effort to maintain it he said what's happened since you know the last six months has
01:04:43
been like a snowball that everybody has changed their position just in the last year
01:04:48
on shutting these things down and we saw obviously germany is re you know thinking the the three remaining of
01:04:54
their six that they were gonna turn off they're putting back on and i think we're gonna see new ground broken and
01:04:59
japan came out just in the last week and said they're gonna build more nuclear power
01:05:04
uh and nuclear power plants now think about that that's awesome that's unbelievable they had fukushima the
01:05:10
germans shut off their nuclear because of fukushima but guys the japanese are saying we're building more
01:05:16
guys fukushima didn't happen by accident there was a like an incredible tsunami which was triggered
01:05:23
by once at 100 earthquake you're talking about these extremely long tail events yes the retaining walls
01:05:30
could have been built better but these are things we find we iterate and we solve it was not the reason to shut down
01:05:36
an entire mechanism of energy generation stupid mistakes where they put it just too low in the wrong place if they just
01:05:43
put it up the hill a couple of miles it would have been fine but also if you look inside of what
01:05:48
happened there was enormous pressure inside of these companies to basically you know
01:05:53
take take actual direct blame and responsibility i get all of that but these organizations were shamed into
01:06:00
turning these things off that is not the way to make good smart decisions okay so
01:06:05
uh gorbachev the last ruler of the ussr uh passed away this week saks robots yeah i mean i think this was a real
01:06:13
milestone you go back to the 1980s and ronald reagan the who had spent his entire
01:06:21
career being a cold warrior saw the opportunity to basically do business with with
01:06:29
gorbachev margaret thatcher had told him that this is a man we can do business with gorbachev had come to power in 1985
01:06:35
he had initiated reforms of the soviet system he was a communist to be sure but he introduced political reforms called
01:06:41
glasnost and economic reforms called perestroika and reagan sees the opportunity to go meet with him and they
01:06:47
signed arms control treaty after arms control treaty and ended the threat of mutually assured
01:06:54
destruction that the world had been living with since the beginning of the cold war you got to remember that you
01:06:58
know the cold war began shortly after world war ii and we had this doctrine of mutually
01:07:04
assured destruction or mad and the whole world was living under the shadow of nuclear annihilation this was showed
01:07:11
repeatedly when i was a kid there was a tv movie called um the day after the day after it was
01:07:17
serious it was really scary they terrorized us that america were all gonna die we had did you ever have
01:07:24
nuclear uh bomb drills we had to get under your desk yeah i mean so yeah so if you're like our age you
01:07:31
remember this that that movie by the way that that was a tv event movie that was
01:07:35
one of the most widely watched movies but there were others you know jim cameron used this concept in the
01:07:40
terminator movies um you know it was something that people were really afraid of and
01:07:45
reagan sees the opportunity he thought fundamentally that uh nuclear deterrence was immoral that yeah better to have
01:07:52
deterrence than a nuclear war but that he if he could he seized the opportunity to negotiate the end of the cold war and
01:08:00
by the way there were hardliners in his administration who did not want him to negotiate with gorbachev but they ended
01:08:05
up doing a series of uh meetings uh it culminated in 1986 at the reykjavik summit and they signed uh deals to
01:08:13
remove uh you know these these inf system deals now and that ended the cold war and then
01:08:19
basically what happened is in 1989 the berlin walk came down gorbachev allowed the wester the warsaw
01:08:26
pac countries to leave and then in 1991 the soviet union collapsed so you know he gets a lot of credit for
01:08:33
being willing to reform that system now the sad thing is if we were fast forward 30 years later where are we
01:08:40
today we're back in a new cold war with russia i mean that we've been spending a good part of this year
01:08:47
talking about the threat of a nuclear use and you know this was a problem that we
01:08:52
thought was solved 30 years ago um and now we're back with it today and you've got to ask
01:08:59
have the successors of you know reagan and and and george herbert walker bush the people who
01:09:06
inherited our foreign policy over the last 30 years have they done as good a job um as reagan did reagan ended the
01:09:15
cold war we are back in a new cold war why what is the reason for this there's been
01:09:20
a a a series of stupid policies that now have put the risk of nuclear war back on
01:09:27
the table my interest in gorbachev is slightly different um he is an incredibly important character
01:09:36
of the second half of the 20th century undeniable you know won the nobel prize as you said david kind of ended the cold
01:09:42
war but the most important thing in my opinion was the precursor to praero strika and why
01:09:49
he did it and as you said like you know this is a fairly art and communist although he had really interesting views
01:09:55
like he ran a very kind of like open um kind of politburo where folks could debate and he you know promoted a lot of
01:10:03
young people from within all of these interesting things but the most important thing and he's
01:10:08
written about this a lot is the reason that he embarked on perestroika was because
01:10:13
ussr at the time had an incredibly poor work ethic terrible productivity and horrible
01:10:19
quality goods and i think that there's something to be learned by that because at the tail end
01:10:25
of communism essentially where you had central planning central imposed economic principles
01:10:33
what happened people did not feel that they had any ownership in the outcome no agency
01:10:40
no agency whatsoever and i think that there's a really important lesson to observe there which is that if
01:10:45
governments get too actively involved this doesn't just happen in russia it happens everywhere it's happening in
01:10:52
california we just talked about it it's happening where we live right now and if
01:10:56
you look at then what happened afterwards it became the aristocracy that basically ruled the
01:11:03
ussr before and then fighting against all these folks that wanted reforms and that
01:11:08
created the schism which then perverted capitalism for you know seven or eight years through yeltsin until putin got
01:11:16
there and that's what created the oligarch class and you know really exacerbated a bunch of wealth capture by
01:11:23
a handful of folks that may or may not have deserved it and i'm not going to judge that
01:11:27
but i just think it's really important to understand that he was forced to embark on this
01:11:32
because of all of these state central planning policies and so it's just an important lesson for americans in
01:11:39
democracy which is be careful if you want more government you might need start work guys
01:11:45
the soviet union their economy used to run on what they called five year plans it was incredibly centralized it was all
01:11:51
run by the government and you know this was communism and the 20th century the second half of it especially was a giant
01:11:59
battle of systems not just of countries not just the western bloc um you know led by the u.s the free world versus the
01:12:06
soviet union the warsaw pact it was also a battle of philosophies and systems it
01:12:10
was the philosophy of state control versus freedom and uh in a free economy and freedom won
01:12:17
you know the free economy won in that battle and the crazy thing is 30 years later we're talking about socialism
01:12:24
being a viable doctrine you have politicians basically saying that they are socialists but 30 years ago you would
01:12:31
have been like that was unelectable and the point is example after example empirical evidence well documented of
01:12:40
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
01:12:45
yourself you know like you'll tell your kids to do to not do something add inside i gotta touch the stove yeah they
01:12:51
gotta touch the stove themselves and get burned we are about to go do that in california can you imagine if like
01:12:58
people who want to be social is here who bind us if they had to be in a food line
01:13:02
or have rations literally russia had food lines and they were rationing food in the 1980s like well yeah that's how
01:13:08
dysfunctional it got yeah a large driver of gorbachev basically negotiating these
01:13:13
peace settlements with you know with reagan and this nuclear you know uh demilitarization
01:13:18
was in part because he knew he couldn't fight right it was this was collapsing yeah they could not keep up reagan began
01:13:29
an arms buildup and there was an arms race and they were losing they were losing they were releasing and this is
01:13:35
and this is why like people should not misunderstand what gorbachev was he was not necessarily some democratic freedom
01:13:41
fighter he was a person who was observing the on the ground conditions of a socialist system
01:13:46
decay their ability to compete and so he had to capitulate before it was forced upon him right
01:13:53
right this is why i don't think he deserves as much credit as ronald reagan is because at the end of the day
01:13:57
gorbachev would have kept communism going if he could have if he could have if he could he wanted the soviet union
01:14:03
to stick together i mean that's right but his but but i think to his credit when the things start to collapse he
01:14:09
didn't silence and repression to try and hold it together so you know he was a he was
01:14:15
a reformer he was a liberalizer maybe and a pragmatism didn't use violence but and ultimately he was a
01:14:20
partner for ronald reagan remember ronald reagan began this gigantic arms buildup he was denounced as a cowboy who
01:14:26
would get us in world war three but when he had the chance to negotiate a deal with gorbachev he took it and they
01:14:32
basically got arms control and it was because reagan was able to sit on top of an extremely productive capitalist
01:14:40
system that allowed him to make those investments that made that capitulation basically a fata complete and i think
01:14:46
that that's another thing for a lot of us to to understand which is free market capitalism removing these degrees of
01:14:54
decision making give us degrees of freedom and i've said this before on the last part the great thing about the ira
01:15:00
and what chuck schumer did is actually will be written in 10 or 15 years from now because when we get to
01:15:06
energy independence when every home is resilient the national security calculus in
01:15:12
america changes wholeheartedly overnight yeah i mean think about it years ago right but i didn't cancel it
01:15:20
okay wow listen uh no it's true if you're willing to use natural gas and fracking america
01:15:26
is one of the richest energy countries in the world oh we produce a lot of oil too yeah i mean listen it it will change
01:15:32
everything if we can really go all in on all of the categories nuclear uh if you let the capital markets do and
01:15:41
the free markets do what they're meant to do they will empower the government to do
01:15:46
great things for all of you all citizens yes i agree with that hundred percent and the reason we want to stop it is
01:15:52
because we have a couple of examples of you know extreme wealth and i think that's something we have to think about
01:15:57
is like are the extreme is the extreme wealth created for a certain class enough to stop the prosperity train that
01:16:03
we actually have in america listen jason the politicians in california think they
01:16:06
can run fast food businesses better than the people who own those those restaurants these people have never
01:16:13
worked in their lives no i mean we have they could work they wouldn't yeah the great thing is we have a running a b
01:16:19
test which will show whether this state central planning can work or not and again if we refuse to want to listen
01:16:27
to the examples of russia or all of these other countries that have tried this then so be it we will know
01:16:35
in the next three to five years that these policies actually don't work and actually that it actually accelerates
01:16:41
the exact hellscape that they think they're trying to avoid but you know not only to my point about foreign policy
01:16:46
not only are we forgetting the lessons of this cold war the economic lessons that a free enterprise system generates
01:16:54
more wealth and prosperity and more national greatness more ability to fund a defense budget create a better economy
01:17:01
not only does it do all those things we forgot not only have we forgotten that but also
01:17:07
we have abrogated we have ended every single defense control and arms control treaty with the russians that reagan and
01:17:14
gorbachev signed why why why did we do that now our nuclear missiles are pointing
01:17:20
each other again and you know what russia's a much poorer country in the us we're actually 15 times richer than them
01:17:27
during the cold war at their peak we were only three times richer than them but we're 15 times
01:17:32
richer but they still got over 6 000 nukes why did we get rid of all those arms control treaties why have we
01:17:37
basically alienated them yeah you we talked we said it before like you're dealing with a pragmatist uh and putin's
01:17:44
a kgb maybe you feel like putin isn't someone we can deal with now but he was someone
01:17:48
we could have dealt with 10 years ago 20 years ago we missed the opportunity to deal with him jason if he was a rational
01:17:54
actor 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
01:17:59
really the only way we'll be able to deal with him is if he doesn't have the oil uh market he has like he just has
01:18:05
too much power from that oil and over time that's the solution we have to be energy independent you know i think
01:18:10
europe has learned that he was a communist he was an heir to stalin and yet reagan's could still do
01:18:17
business with him and sign an arms control treaty so that we could end the risk of
01:18:22
mutually assured destruction you do not have to believe that putin is a good guy in order for us to avoid
01:18:30
getting back into a cold war which is the situation we find ourselves in now how does it benefit us to have russian
01:18:37
nukes once again pointed at our heads yeah i mean and the reason why the reason why we alienated him jason has
01:18:44
nothing to do with him being a madman or whatever it is because we brought nato which he views as a hostile military
01:18:51
alliance right up to his border and and by the way listen to this video from gorbachev gorbachev was asked about nato
01:18:58
expansion in front of the us congress he was giving a talk to them and they asked
01:19:02
him gorbachev what do you think about nato and what did he say he said that you cannot humiliate a country this way
01:19:08
and expect there to be no consequences gorbachev was against nato expansion when when basically george herbert
01:19:14
walker bush and the secretary of state james baker went to gorbachev to argue on behalf of german reunification this
01:19:20
is basically in 1990. baker made the promise to gorbachev not one inch eastward gorbachev said yes
01:19:27
okay they can reunify but we do not want nato moving up to our border baker made
01:19:32
that promise we have brought nato up to their border that is why putin regards us with hostility
01:19:39
yeah and i think europe regards him with hostility and they're scared of him because he keeps invading countries so
01:19:45
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
01:19:51
ask has the u.s foreign policy over the last 30 years that's gotten us in a new cold war with russia has that been a
01:19:58
successful par foreign policy they have undermined all the good work that ronald
01:20:02
reagan and gorbachev did together to end the cold war we are back in a new cold war and you need to find reagan in
01:20:08
hollister you need to find a new right some blame putin has some blame but so does the us state department so does the
01:20:13
u.s state department and europe europe has a big part of the blame to here because he's their neighbor yeah for
01:20:19
the sultan of science the rain man and uh reagan library chairman are you the chairman of the reagan library let me
01:20:26
ask you this when you were a kid did you have a reagan poster in your room have you ever owned a reagan poster
01:20:32
i'm sure i'm sure i've definitely owned a picture of of reagan and um ronald reagan listen jason wrong do you
01:20:39
ever hang around reagan poster or a picture in your dorm at stanford yes or no listen ronald reagan that's a yes
01:20:46
hold on a second ronald reagan won the cold war without firing a shot he gave us the greatest
01:20:51
economy the us has ever had he ended the inflation and stagflation in the 1970s and again he he avoided getting us into
01:21:00
any of these major wars tell me the politician who if you could have lunch with anybody who is the historian who
01:21:05
you revere who has a track record like that um yeah i mean i i guess one would say bill
01:21:12
clinton you know would be the closest you know great president of our lifetimes right you would agree with
01:21:16
that i think he's a good good president especially number two behind reagan in our lives remember he benefited from the
01:21:23
economy that whatever reason you would agree with me clinton is right behind reagan reagan and clinton in since like
01:21:29
1950 something easily top two yeah right easily easily it's hard for their sacks to say
01:21:36
hour was very good listen i mean but head and shoulders i think like for practically what they dealt with at
01:21:41
their point of time amazing all right listen saks i know you love reagan and uh reagan i think that's what you
01:21:49
should put you should be bringing nixon reagan and bill clinton one on each side of you for next week will you
01:21:54
do that for us i gotta go guys i gotta go too all right love you sexy poop i love you all next time bye
01:21:59
love you too happy birthday thanks bro we'll let your winners ride rain man david
01:22:13
and they've just gone crazy with it [Music] we should all just get a room and just
01:22:35
have one big huge all just useless it's like this like sexual tension that they just need
01:22:40
to release [Music] your feet [Music] i'm going on [Music]