E94: NFT volume plummets, California's overreach, FBI meddling, climate change & national security

all right everybody welcome to episode 94 of all in this is a summer unprepared episode there's not much news we're gonna wing it with me again in his uh golfing cap the rain man himself david sachs you do okay buddy yeah that's good yeah all right i'm kind of annoyed that we're taping on a wednesday you know this is a slow news week it's a slow news well that's not why we're taping on wednesdays because you have to want to go to burning man well whatever i mean listen everybody has to get their burn on sex have you ever been to burning man yeah i've been before did 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

uh it's a cool experience doing worth doing you know once or twice in your life it's not something i want to do every year but um i know a lot of people do like doing it every year they're like really into it i'm not really into it that way but i think it was a worthwhile experience to go at least once have you been uh no freeburg have you been i've not been now i have no desire no i don't like driving in the car for a long period of time and well by the way i'll tell you i'll tell you why i don't really have a huge desire to go i uh i don't really have a huge desire at

this point in my life to want to do a ton of drugs that's not that's not just about that really no really exactly what it's really about is art are we joking right now it's if you like art and you like music it's amazing it's amazing i really i really like art i think i actually collect phenomenal art in fact i like to go to like freeze the biennale it would blow your music no you have no idea the scale of the art there is tremendous it is extraordinary and if you're into music can we just can we just call it what it is it started out as a festival that did celebrate art and creativity yeah and over time became mass market and in

order to become mass market there is still an element of that but it's a huge party and i think people should just be more honest that it's super fun you can really rage for a weekend or for an entire week and people should enjoy themselves but let's not like have to put all these labels about how like intellectually superior it is and how you feel like [ __ ] i don't think it's just people doing really it's okay it's okay to go and do drugs the thing that's interesting about it is it's really about community a large number of people get together they build cancer do drugs no in a community no you've never been you would

literally that's not the vibe there the vibe is really dancing and creativity and art and community but anyway so it's like a rave it's where everybody is on drugs are the best when you're sober best best 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 great filter here which is you've got to drive six seven hours into the desert and you have to survive you have to bring everything with you and bring everything out you know whatever it is a bathroom water food and it is harsh i mean it's a hundred plus degrees in a day and it's 40 degrees at night it's not easy to survive it's hard it

used to be that way when i went home when i went i went with a bunch of guys who had the whole thing like wired in and they had like these yurts and it was like a whole community and they had like running water and a kitchen and it was basically glamping it was glamping there are people how's that hard to survive no 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 yes they spent the whole year whatever setting it up and it was really elaborate and then there was an article like in the new york times basically saying that you know that they were ruining burning man

because they were making it too nice that was part of the problem you remember this that's when i went i went to the two nice experiences so they wrote that about you yeah yeah basically great you ruined burning man great time saks thanks for ruining birdie man [Music] [Music] i don't know if you've been following 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 dropped 99 since they first peak of 406 million dollars in a single day on august 28th volume dropped to around 5 million dollars down 99 according to decentralized app tracker dap radar on a monthly basis open seas volume has

dropped ninety percent according to dune analytics the floor price of a board ape has now dropped by 53 percent uh if you remember openc raised 300 million at a 13.3 billion dollar valuation december 2021 in a round led by kotu in paradigm to put that in perspective that was nine whole months ago my how the world has changed fredbear what's your take on nfts and 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 bubbles as a species this is just another one i thought we're going to stop doing

stock market crashing stories well this is different this is a different market what do you think did you invest in any of these nfc month of this story which is fill in the blank asset class crashed yeah this one scene 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 category ending do you think there was ever anything interesting here because you took you heard a lot of pitches like i did for how nfts were going to change everything you know what i'll i'll say something because i liken this to the 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

past but like what differentiates humans from all other species on earth is our ability to tell to communicate and tell stories a story is like a narrative about something that doesn't exist and by telling that narrative you can create collective belief in something and then that collective belief drives behavioral change and action in the world right i mean everything from religion to government to money to art is all kind of driven all markets are driven by this notion of narrative and collective belief that arises from that narrative so when you go to an art dealer and you have a sit down with an art dealer you might appreciate the art but then the narrative begins and the

narrative is this artist did this and they came from this and the artist that looks like this created at 6.8 million and this artist is only trading for 3.2 million and the whole narrative takes you away into okay i should pay 3.2 million for this piece of art and ultimately it'll be worth more and that's the fundamental premise of markets is you're buying into something not necessarily always and this is such a minority now it's scary used to be that you own a piece of a business or a productive asset you pull cash out of it hopefully you get more cash out than you put in when you buy it nowadays markets allow you to trade therefore the

majority of market-based decisions are driven by if i buy something for x i'm going to be able to sell it to someone else for y and so the narrative is driven around i'm paying this someone else will pay y down the road i'll make money from that and this has been repeated a thousand times over it's been repeated in the ico tokens it's been repeated in the tulip bubble it's been repeated in every art market and subsidiary of every art market since the dawn of time since the dawn of of markets and i think the nfts are really just one more kind of example where this beautiful narrative has formed the the

digitization of art but it is no different than any other form of assets that we tell ourselves the story around and we convince ourselves that i'm paying something today and someone else will pay something more for me tomorrow and i will also say that in the last year with the liquidity that we saw the last two years it leached into the stock market where there's supposed to be more rational behavior that ultimately the cash flows of an asset you're buying should generate more for you than the money you're spending to buy that that asset and ultimately you can maybe trade out of it early but still so much of it became about well the stock is going up therefore if i spend x someone else will

spend y and i'll make money on the stock with no underlying assertion of what's the productivity of that business what's the return on cash gonna be based on the cash flows coming out of that business over time or any of the fundamentals around it and so so much of our discussion and distortion has really been driven by this narrative fueling and i think the nfts are an example but there are many others and we're going to see many more as long as humans have the ability to communicate with each other any do you have any take on it jamal i think freeberg's mostly right like i do think that there's this thing the the burning man coachella example

is the best way to describe this a lot of these things are the same but when a few people approach something early they're too insecure to admit that it's the same as something else and so they spend a lot of time trying to tell you a narrative about why it's totally different the buffett example you know would be the quote you know whenever somebody tells you that this time is different it's probably not that different or the other quote that's well worn in history is like you know things don't necessarily repeat in history but they rhyme all of this is trying to say that

other than like fundamental leaps of science there's not a lot of stuff that's new in the world you know we are repeating things over and over and one of the things we repeat is the social capital that you get from having certain choices and then getting other people to validate those choices because you want to feel like you're you know worthwhile and this happened in nfts and i'm sure in the first phase of different movements in art that also happened it's probably happened in a bunch of other markets as well so these things are more similar than they are different coachella and burning man the same nfts

and part of the art market the same everybody that runs to you with why it's so different i would just have a grain of salt and say you don't need to be different just enjoy it because you think it's cool all right we can go either to this california fast food wages story or we can go to goldman sachs workers are quitting on mass because goldman sachs is saying you got to come back to the office five days a week where do you want to go boys i think the california thing is really interesting just the the three things that california did in the last week i don't know if you guys saw but number one is they

basically uh said that you know you have they're going to ban ice combustion engines i think by 2035. so you have to be battery ev um and then you have the new sales you can still have sales sorry yeah new sales um which is the first in the country to do it and just to go back to a second california is the largest auto market in the united states and effectively you know trump and california got into a huge spat because california had certain emission standards that were tougher than the rest of the united states and you know the federal government tried to sue california and

back and forth all of this rigmarole so california's always sort of led on climate that was one thing then the second thing is they said we're going to create you know a state sponsored organization to set the minimum wage rates for fast food workers pause what we think about that and then the third thing is that um this congresswoman i think or this assembly person buffy wicks passed the law um through the senate and through the the house that essentially holds social media companies liable for the mental well-being and the mental health of kids um

and depending on where you're lying on all these issues it's like an interesting kind of lens in which where like california is really becoming extremely extremely um legislatively active and basically imposing their will on free markets in the economy there yeah and for people who don't know the fact the fast food issue was they want to move to a more european style where instead of unions debating with individual corporations mcdonald's burger king whoever what they're going to pay their employees uh or employees uh having that discussion one-on-one they want the state some state authority to pick the amount

per hour fast food companies pay and then i guess disintermediate the unions uh it's kind of confusing but interestingly uh of uh our friend uh lorena gonzalez if you remember she's the one who told elon to you know f off um and was a former uh democratic legislator she introduced the bill when she was in the assembly and so it's kind of a weird approach uh i'm not sure why the government no it's not about it's not it's not discriminating the unions she lorena gonzalez fletcher i guess now she's the former democratic legislature who drove elon out of the state remember when she said sure you know f elon

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 biggest unions and what she said is that this bill will move california closer to the labor model used in europe where unions negotiate the unions are still negotiating for wages and work conditions but in an entire sector with some sort of government board rather than company by company so in other words it's too slow to unionize you know company by company they would just want to unionize entire sectors of the economy now the thing that's really crazy about this minimum wage proposal is that

like you said jason it isn't just that they set a minimum wage they created a 10 person panel so there's a new government agency that's going to regulate fast food the fast food industry you know they're not going to stop at minimum wage it's going to be work conditions so now you're turning fast food restaurants into a highly regulated part of the economy and the weird thing is it's not even just all fast food it's basically chains that have more than 100 fast food restaurants nationally so in other words if you're a local operator of two mcdonald's you'd be subject to this 10 person board but if you own 20

restaurants that aren't part of a national chain in california then you're not and so the weird thing is that some workers in the fast food industry could get this new minimum wage of 22 where other or as other workers who work for you know they're not part of a major chain would get the statewide minimum wage at 15. so it's it's um it's kind of unfair in that some parts of the restaurant industry are being regulated and others aren't is there any justification here that you can think of to not let the free market do its thing frudberg well if you represent the workers you're saying hey pay him 22

and you can and here's what that points out it actually points out that there's probably a pretty big business flaw in a business that's so reliant on commodity labor and that business in and of itself is not as valuable as you might have thought it was before think about it this way there's a company called mcdonald's and then there's another company called mcdonald's labor and what happened before is mcdonald's employed people to do work at mcdonald's and maybe what happens in the future is all those people are looking left and looking right and they're like you know what mcdonald's has nothing without us

we are the business we deserve the value so in terms of how much of the value of the business flows to the shareholders of mcdonald's versus the employees that work at mcdonald's the employees that work at mcdonald's are saying let's go do a startup and our startup is called union and our business that's called union is now going to provide a bunch of services to mcdonald's and those services we're going to start to value capture what they're doing and it indicates that maybe there's something inherently disadvantaged in that model and it could be that the argument could be made that

that business in the early 20th century in the late 19th century yeah the 19th century early 20th century and beyond that you could build a good advantaged business because there was such an eager hungry workforce people looking for work you people would come and work for nickel an hour or whatever and so you as a business owner could make a lot of money doing that you could sell a product for a dollar pay people five cents to make it for you but nowadays those people are looking left they're looking right they're like wait a second we are the business or we're 90 of the value of this business and so couple things will happen number

one is the inherent business model of a company that's so dependent on commodity service is going to be flawed and challenged in the 21st century and fast food restaurants aren't going to be as valuable businesses that rely on commodity service are not going to be as valuable number two businesses are going to automate so new businesses will emerge that actually do the fast food work or do the car building work or do the dock loading and unloading work that are automated and they'll have an inherent advantage in the economy and they'll win and i think number three is that in the near term consumers will suffer because prices will go up because

someone has to pay for the incremental cost of running this unionized business and that will ultimately be the customer of that business i'll say the fourth point is i am concerned about this sort of behavior in regulated spaces where the government has actually control over the market itself so this a good example 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 shipping company and have a dock the docks are run by the cities and they're run by the state and so those docks access to those docks access to that market is regulated by the government so then what happens is the union right the

the labor company can actually have regulatory capture through the government of a segment of the economy and that's where things start to get dangerous so look i'm all for unions if they want to show that a business is reliant on a commodity labor force and commodity service and they all band together and start a startup i mean that's what we do we all start a company yeah and go and compete but the issue is then when the government creates regulatory capture over a segment of the economy and make it difficult for the free market to ultimately do its job of either automating or creating a newly advantaged business model or all those

things that allow us to progress automating's coming a couple of us made a bet on a crazy idea of like automated uh robotic coffee called cafe x uh not to talk our own book here and the company really struggled during the pandemic but they have two units at sfo jamal they're doing 73 000 in two units last month and i'm like wow the the company figured it out and there's another company doing french fries this is the this is the sad thing that california doesn't realize is like i think that the folks writing these laws have just an extremely poor understanding of economics

and capitalism because the first thing that it does effectively and everybody can understand this is it caps the profitability of a company right because it effectively says if you look at an industry that is over earning then this council will essentially see money that should be reappropriated to employees now that idea is not necessarily a bad thing for example you see that all the time in technology right if you look at the ebitda margins of like big tech and how they've changed they've actually eroded over time as the companies have had to generate more revenue because employees demand more and more

of those gains that's an implicit part of how the free market economy works in technology so you know if you don't feel like you're getting paid well at you know google you go to meta and you get paid more and vice versa so there's a natural effect of people being able to do that in certain markets but when you impose a margin and essentially say you can only make 10 because the rest of these profits i'm giving to these folks because i've imputed their new wage to be something that's much greater than what they were paying before the unfortunate thing is what freebrook said which is that you will rebuild that

business without those people because it is the rational thing to do and so unfortunately what you'll do is you'll take a bunch of people that should be in the economy right think about like new immigrants or young people that are first getting on their feet they'll take these jobs you know i mean i 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 had and that has ripple effects as these folks get older or try to get more ingrained in the economy and this is what i wish california would understand is that these things aren't free and even though

they seem like you're coming to someone's rescue there's all kinds of unintended consequences and very obvious consequences that you're ignoring by not really understanding how the economy works i'll just say like look these people can i'll start a sec but i mean you know the people that are elected are elected by the people to represent the people they're not elected to govern over the long term plan necessarily for the state and while you think that those two may be the same the near-term incentive and the near-term motivation of someone who's voting is i want to get

a benefit for myself sooner rather than later not necessarily i want to make an investment for 30 or 40 years down the road and if you're an individual that's struggling in some way you're going to prioritize the former over the latter and you're going to elect someone who's going to go put in place public policy that's going to benefit you so i don't necessarily raise my hand and say i blame the people that have been elected i raise my hand and i say look this is the natural evolution of what happens in a democracy where there is a struggling class and there were where there is some sort of view disparity or considered disparity that this is what's going to

happen in a democracy under this condition is that you're going to elect individuals who are going to go and govern and they're going to make decisions they're going to benefit those individuals that got them elected over the short term and there may be some real long-term damage that results saks is a part of this problem is that uh people are now looking to the government to solve their problems in life versus maybe looking internally to solve their problems and you know negotiate better salaries and hold on i think you have to give people a little bit more credit nobody was asking for them to step in like this look this is as much for the

politicians as it is for any of the workers um what's happening right now the national restaurant association and all these restaurant lobbying groups are flooding the state the legislators the governor with lobbying money because they want to get this bill modified tempered or thrown out and so this is basically a racket like look as a public policy matter it makes zero sense for the same worker if they go work at say jiffy lube or something outside the wrestling industry they get the california minimum wage of 15 if they go to a mom-and-pop restaurant they get the minimum wage of fifteen dollars but if they go to mcdonald's

they now get a new minimum wage specifically for chain restaurants of twenty two dollars that simply makes no sense there's no public policy rationale but the real question you have to ask and trump is kind of getting at this is why shouldn't it be fifty dollars why shouldn't it be a hundred dollars well the reason is because if you raise the minimum wage too much then these um employers have a huge incentive to replace that labor with automation and so the unintended consequence that your mouth is talking about is that these big chain restaurants are gonna rely even more heavily on automation now and they're gonna basically employ less of

this labor where the price has been artificially erased for that sub-sector of the economy from 15 to 22 for reasons that no one can really explain so again this is not for the benefit of workers it's for the benefit of the politicians look what's happening right now there's all these articles talking about the lobbyists coming in they're going to nav gavin newsom begging him to be their savior right now and this is the game that the california democratic party plays it's a one-party state where they where basically business loves gavin newsom because he's their protector he's a protection end of the extortion racket lorena gonzalez gets this bill passed which is basically incredibly damaging

to these chain restaurants and they have to go running to gavin newsom and beg him to either veto it or modify it temper the bill so it's not as destructive to their business he's a protection in the extortion racket but it's the same racket this is a one-party state and what they're doing with chain restaurants they would do with every sector of the economy if they could it's just a matter of time and what is the purpose of the california government like are there things they could be focusing on other than this like maybe the free market settles this issue and they can extract benefits from the private sector from

basically the wealth producing part of the economy and to line their pockets in the pockets of their supporters you know that the typical government worker in california makes 53 percent more than their private sector or counterpart and if you factor in all the pensions that have been promised it's a hundred percent more okay so basically there's a huge wealth transfer that's taking place where the where basically the legislatures the party they are transferring wealth from the private sector to their supporters their backers and friedrich you talk about democracy listen i mean california is a one-party state and ballot harvesting is legal here i'm not

saying the votes are fake or anything like that but there's a giant party machinery and apparatus that literally just goes door-to-door and collects the ballots from their supporters they literally know who their supporters are on a door-by-door household by household level it has gotten to the point now where the party machine is so powerful they can pretty much run anybody for any post and get them elected it's very hard for an outsider candidate it does feel like people are getting tired of it no but guys that's exactly 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

jobs he waited in line he didn't you know rock the boat independent of any of the things he did right or wrong and he had some pretty big moral transgressions it didn't matter because it is about paying your dues and waiting in line because there aren't any meaningful challenges here none i'll tell you so in l.a 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 bass it karen bass is basically a product of the political machine she's basically worked her way up in the democratic party forever sort of uninspiring candidate she's just basically a puppet

of the machine caruso is actually he's a real estate developer who's built some of the most landmark you know spots in la like the grove like the pacific palisades development he's made incredible he's created incredible amenities for the la area he's also been on a bunch of civic boards um you know i had lunch with him at the grove and people were coming up to him he's like a celebrity they were taking photos with him he's the best possible candidate that you could have in a place like la he actually understands business i think he would restore law and order i mean all this kind of stuff right he's spoken

out about the homeless problem being out of control and on election night he had the most votes but five days later when they counted all the the basically the collected ballots through ballot harvesting karen bass was up by like five points that is the power of the ballot harvesting and i still hope that he wins but the party machine is so powerful they can basically get almost anyone elected in the state can't the battle what's that just devil's advocate here the the ballot harvesting can work both ways like you could go collect republican votes

no but you have to have the party infrastructure to literally go back okay so the republican hasn't the republicans haven't done that think about it this way okay so you know like your phone there's a platform and there's an app think about the party as the platform and the candidate as the app okay the platform can drive a ton of traffic to whatever app they want a guy like caruso doesn't have the party behind him so he has to build his own operating system exactly so he has to build his own platform then he has to build his own candidacy so when you think about the amount of money that's required to do something like that about how hard it is

to do it it's it's very very hard so he spent something like 100 million of his own money hopefully he wins but if he doesn't all the infrastructure all the platform that he created just goes away and then the next candidate has to start from scratch this is why outsiders is almost impossible why isn't the gop invested in california they just don't think they have any shot because it seems like the the democrats are 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 affiliation in california towards democrats so look i mean the republican party here is a mess and that's part of

the problem is the republican party in california needs to move to the center it's a plus 30 blue state unless they're willing to do that they're not going to make progress but that could take you know generations to fix and with roe v wade and that kind of stuff it's going to be really hard to look there are pro-choice republicans in california but all newsom has to do is point to what's happening in texas and you know all of a sudden people kind of revert to their tribal political affiliations i'll make i'll make one more simple point the average voter in california probably knows more people that work at mcdonald's than our shareholders of mcdonald's

and i think in any time that there's policy that gets voted or gets suggested or ultimately gets passed there's a side that benefits and there's a side that doesn't and if you know more people that benefit on one side than are hurt you're probably going to be supportive of that policy and i think that's probably a pretty simple rubric for thinking about how these things over time evolve that's true nationally why is that only true for california i mean like in florida yeah first person in florida knows more people who work at mcdonald's than shareholders mcdonald's and they're not engaged in a systematic takeover of the private sector philosophically they're

they believe in independence and businesses not being interfered by the government right that's a core tenant of the republican party also the sad reality is that within a few years unfortunately you'll know a lot fewer people that work at mcdonald's because the number of jobs for humans will be dramatically lower they got rid of the cashiers that's gone already or what people will be more acutely aware of in a number of years is how expensive mcdonald's has gotten because if the price doesn't know that that won't be because like again mcdonald's has a very simple no not not even the market mcdonald's is not stupid

they understand how to use excel and so they'll think well i can amortize a robot versus actually jacking up um prices because what mcdonald's understands is the sensitivity of pricing to demand for their product yeah that's right right i mean they are the most intelligent about how they price every anything at the sort of the lower end where you're capturing you know nickels and dimes they are the most sophisticated and understanding supply demand and and and the curves and so to think that they're not going to just invest heavily now at the corporate level the next franchisee of mcdonald's will still pay a million dollars for

franchise fee but will give will be given a bevy of robots that they rent for mcdonald's and they'll have to hire half or a third less that's that's the real shame of this which is the number of people that should actually be gainfully employed in the economy will then shrink again but in this case it was because legislators just completely don't understand how incentives work and how the economy works and people are not clued into exactly how well narrow ai machine learning is doing right now by the way i'll say like it's really moving quickly one general way to think about this is is technology

is introduced and the technology creator captures roughly a third to a half of the value increment because of the delivery of that technology the productivity increment so let's say that it costs 12 15 an hour to employ a mcdonald's labor today and let's say that you can build technology that the amortized robotic cost is ten dollars an hour there will be a technology company that will make 250 an hour off of that so net net what ends up happening is productivity has to be gained and prices will reduce and so you know there are moments like this where there could be an acceleration of technology and also an opportunity for

new industries to emerge and when that happens new jobs emerge too so it's you know maybe look i mean at the end of the day it seems luddite-ish but you know there's going to be a mark a market opportunity that will arise i think we need to like just step back and and ask what is the type of economy that california is creating here with this fast food law with these other laws we're talking about this is a state in which you have a disappearing middle class the middle class has been moving out of the state by the hundreds of thousands in fact last year we had for the first time net migration out of the state this has

basically become a state where the only middle class are basically the government workers who like we talked about are making twice as much as their private sector counterparts it's a state where you have the very rich and very poor and the only middle class are government workers that is what we're creating the rich in the state have done really well over the last few decades why because of globalization so you take the two big industries in the state tech and hollywood entertainment they have benefited enormously through globalization because now you can sell software or you can sell movies or music exactly so now these these industries

have become you know massive global exports and so if you're in those industries in california you've done really well because now your market is the whole world so the super rich have done really well that's funded the state that's allowed the state it's almost like a resource course to have all these bad policies that really hurt small business owners they've been moving out of the state and so again you've got the very rich and very poor this is not an economic model for the entire nation this is what you know gavin newsom says he wants to take to all of america this is not a model for all of america in order for democracy to function we need a thriving

middle class and this is not a recipe for delivering a thriving middle class to america and 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 company and got sold i'm not going to say the name of it but if you watch this quick robot this is a computer vision company out of boston and like they're doing high-speed picking of tomatoes and berries like this is a two-year-old video when we invested and wound up getting bought by another company and they're doing vertical farming but

and there's companies doing this now for french fries it's over like we are within you know i think five ten years 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 at this moment in time where we try to squeeze an extra 10 or 20 percent out of these you know uh employers and then you're going to see these employers say you know what 24-hour day robot yeah it's a little bit upfront cost i'll put it on a lease and they're just going to move to these robots it's it's really very close to being game over for manual

labor and you can see it also with cyber truck and you know what elon's doing with ai and these things are getting so close and it's been i don't know when did you invest in your first robotics or ai company saks or chama do you remember the first robotic or ai company you invested in and how long ago was 2014 [Music] it's a company called relativity space which is 3d printing rockets and engines and basically they're able to use machines to learn how to actually fix the morphology of all the materials that they use to print better and cheaper and more useful rocketry that's an example but then that

led me down the garden path i was just going to say something more generic instead of talking her book which is i think people misunderstand that moore's law has actually not ended um and this is something that a friend of mine adam deangelo characterized to me a beautiful human being from work 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 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 minute he said it i was like my gosh it's like moore's law never ended it just shifted to gpus

you know because the inherent lack of parallelization that cpus have you solve the gpus and so that's why the the surface area of compute of innovation has actually shifted json to what you're saying which is you know all of these new kinds of machine learned models because you can just now brute force and create such a tonnage of compute capabilities and resources to solve these problems that weren't possible before so you know you see this thing you know fun things like wall-e or you know dally sorry and more sophisticated things like gpt3 but he's right which is that you know we

are at a point now where all kinds of expert systems which is sort of like v1 simple forms of ai are going to be completely next level well you think about the data sets adding to that and so when gov exactly and so when governments don't understand this and they try to it you know step in they're going to be shocked at how much faster they're pulling forward the actual future they actually are trying to prevent yeah the the data sets is the other issue fredberg you look at you know the the data sets that are available to train so you have the gpus still escalating massively the amount of

compute power can do you have cloud computing at the same time and then you have these data sets one of the most interesting things about you know dolly and a lot of these is the corpus of data they're able to absorb and a second factor issue that is starting to come up is who owns the derivative work in copyright so if you train your data set on a bunch of images and those images are owned by disney or whoever you know photographer getty and then the ai makes you a new photo so here's another here's another example of this here's another here's another example of this in a law

that just passed so in the ira uh the inflation reduction act you know we granted cms and medicare the ability to negotiate drug prices and we actually also capped um the total prescription costs that any american can pay at two thousand dollars now it turns out that overwhelmingly most americans will never spend two thousand dollars a year on prescription medications but there will be a few and they bump up against drugs that cost billions of 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

know beta thalassemia like 2.8 million and you're and and we will all bear the cost of that now if cms and medicare go and really crunch those costs what is pharma going to do well pharma is going to do what is the obvious thing which is like if you're going to cap what i can make i have to completely change my r d model and they're just going to use alpha fold you know and what it's really going to do is potentially put a bunch of research scientists out of work and those are folks that should probably in the you know for our general future be gainfully employed but

the nature of their job is going to change completely because the economic capitalist incentive of big pharma is going to move towards technology which is you know an alpha fold and their protein library is the equivalent of ai and automation for mcdonald's so this is where again governments have to be super careful that they understand what's actually happening because they're creating incentives i think that they don't completely understand all right we can go to raw meet for sax zuckerberg's uh admission of fbi meddling truth social uh well you guys disputed me and like how dare you imply that j

edgar hoover and jim comey's fbi is politicized remember you guys were debating against that was about the investigation you didn't but some of you were saying i can't believe saksa you're part of the 35 of americans who don't believe fully in the rectitude and integrity of the fbi i don't know if this is fbi oh man comes this bombshell i mean you gotta admit this was a bombshell what was the bombshell okay so i'll okay okay so joe uh joe rogan had zuck on and he asked him about this very specific thing remember the new york post story on hunter biden's laptop in like the week or two before

the election was censored right and it was a very controversial thing because the fbi was dealing with known uh russian interference and hacks and all this stuff uh part of which trump was like asking people to hack other candidates okay you're not even setting this up correctly well okay i'm gonna keep going and then so this is what zuckerberg said hey look let's see let's moderate this segment well i mean i'm just gonna read the federalist which is 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 the fbi which i still view as a legitimate institution in this country i'm quoting from the federalists which

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 guard about something i want to take it seriously so uh when the new york post broke the hunter by the laptop story on october 14th 2020 facebook treated the story as potentially misinformation important misinformation for five to seven days while the tech giants team could determine whether it was false or not during that time uh this is federal speaking decreased its facebook decreased distribution of the story by making the story rank lower in the news feed and this is his quote zuckerberg's you could still share it you could still

consume it zuckerberg explained but quote fewer people saw it than would have otherwise and while he would not quantify the impact the facebook founder said the decreased distribution was quote unquote meaningful in a follow-up rogan asked if the fbi had specifically said quote to be on guard about that story meaning the laptop story after originally responding no zuckerberg corrective says i don't remember if it was that specifically but it was basically the pattern so basically i guess you would agree sax zuck didn't know exactly what to do here with this information um and if it was real or not which you

know it turned out to be very real and it probably could have swayed the election i mean i do think if people thought there was a connection between hunter bind maybe it could have i don't know if we want people being hacked to do that so what's your take on it sexy you know just hacking in general and this specific thing what should the fbi do if these kind of hacks are getting released of people's families okay so yeah here's the complicated issue right there's many vectors yeah what zuck basically says the fbi came to to them and encouraged them to suppress this story or to suppress a story that they described that would be just like

this okay so now look a lot of conservatives are dragging zuckerberg and facebook for doing for doing the fbi's bidding but i think a lot of people i think most people in zuckerberg's position would have believed the fbi when the fbi comes to you and says you're about to be targeted by russian's information you need to do something about it you would have listened to the fbi he believed the fbi my point and so i don't blame facebook too much for that i think it's understandable that he would have believed them the issue here is the politicization of the fbi look let's back up what was happening so the new

york post gets this story about the leak contents of hunter biden's hard drive in response to that you had 50 former security state officials many of whom were democratic partisans like clapper like brennan they signed a letter saying that this story has all the hallmarks of russian disinformation now the truth is they had not inspected the hard drive they simply said this is the hallmarks of it and as a result of that we thought that the social networks and so forth censored the story okay now it turns out that the fbi by the way the fbi had the hard drive they had the hard drive for over a year it was an image of the hard drive or the actual

hard drive they had the actual hard drive the leak of the story was was likely prompted because the fbi didn't appear to be doing anything with the hard drive so somebody leaked the story to you know to rudy giuliani and then he leaked and so forth the new york post but the point is that the fbi had the hard drive so they knew it was authentic okay so they knew that this hallmarks of russian information was not the truth because again they had the authenticated hard drive in their possession and yet they still went to zuckerberg and basically played into this narrative this phony narrative

that you know democratic partisans like clapper and like brennan had created was there anything meaningful by the way about what was on the laptop in your mind like do you think it's relevant do you think we want people's laptops being hacked like this who are in people's political families yeah i don't think the laptop was hacked i mean there's a weird convoluted story about how the laptop ended up but but look the the point of people's personal pictures you know and stuff like that be released i never liked the part where they were showing uh hunter biden's you know drug use and

the other personal stuff i thought that was scarce and i didn't i didn't like it and i didn't think that was uh particularly germaine so i think and i think it was an invasion of his privacy however there were materials on there related to his business dealings in ukraine and i don't say see how you can say those weren't relevant oh i think they're trying to relational he's being investigated for them too now i mean a lot of this has to do with timing too you know it's like how do you deal with something like this seven days before an election when you know the russians are hacking it if it has been or not it's a really difficult situation for everybody i think so so

look my point my point is this that um i i can agree with you about the personal stuff about hunter buy and shouldn't come out but but with respect to the ukraine stuff that was legitimate it was fair game and the in most importantly i don't know whether it would have sworn the election not probably not probably by itself it's not but the real point here is that the fbi went to facebook to censor a story that they must have known was true because they had the laptop in their possession they should not be intervening in elections that way that is the bombshell here that's unbelievable i i think they didn't know the providence of this but i guess we'll

find out where are you landing in the providence of a hard drive that's in their possession i didn't have an nft exactly um where do you how are you uh i think you always start culture exactly that's exactly audience wants to know saks audience really wants to know where you were going to reserve judgment on the mar-a-lago search where do you and or republicans come out on all this now when you see [ __ ] he did in fact have a ton of really sensitive stuff like it'll define a ton and of defined terms of really sensitive stuff yeah i mean listen like what's your what do you have 300 pages of documents mark classified

if you were to go to the 30 000 boxes of documents that obama took are you telling me you really couldn't find 300 pages that have classified markings on them well the fact that he wouldn't give it back by the way i never disputed it hold on a second i never disputed that they would find documents with classified markings in trump's basement i still think that the approach was heavy-handed and we don't know enough because we don't know what those documents are yeah every document they stick in front of the president or not every but many of them are more classified but okay so let me ask you this aside from these like

kind of details what is what is trump's deal that he just wouldn't give them back do you think what do you think his motivation was i mean i have my own theory which he likes memorabilia he's always liked to show off i think that's it i think you got it i mean honestly if i had to guess what this whole thing was about it's probably that the archivist at the national archives wants the original copy of those letters with 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 about something as silly as memorable memorabilia i think it's about memorabilia i do not think these

documents pose a threat trump just give it all back it's so dumb but why would the fbi feel the need to do a race by the way remember when we first discussed this one second when we first discussed this issue we were told it was nuclear it was nuclear secrets could be yeah no they've backed off that completely it was not in the affidavit it's not about nuclear that was something they leaked to get them through a tough press cycle so but look my point about all this stuff just to wrap it up so people are clear was never to defend trump per se my real concern is the politicization of the fbi our law enforcement agencies should not

be weaponized by either party to pursue their you believe they are at this point and we just saw with the zuckerberg thing what business did the fbi have going to zuckerberg to get them to censor a new york post story that turned out to be completely true hold on a second that is election interference they should not be doing that yeah that is a tough job if they don't know if it's been stolen or not yeah it's a tough job by the way the government of the united states has no business censoring a free press that is a violation of the first amendment when the government instructs a private company to censor a press story that the government itself

does not have the authority to censor that is a violation of the first amendment we thought remember when jack dorsey said that he regretted the censorship that twitter did and he came out with that apology we thought it was just twitter's decision now we find out from zuck that he was leaned on by the fbi and i think that these big tech companies like twitter like facebook they're gonna have to have a new policy which is when the government says we want you to censor something their response needs to be show us a court order they do not just censor now based on the say-so of some operative framework i would agree with you i agree with you

on that i think it was a bad decision obviously the one big tech company that really nailed this i think was apple you know very early on they drew a really hard line in the sand with the san bernardino shooter because they said if we allow the fbi to get into this person's phone even though you know what he did was completely heinous we are going to create a back door that will become an exploit for everybody and we are drawing the line on privacy and security now different set of issues but it just goes to show you there have been a few examples where some of these companies have drawn a

hard line and then in that example and i think jason you mentioned this they went to israel and had that company hacked the phone okay whatever but it didn't come with um they were able to stand up to the pressure so i think there are some example stats where you you can say no i mean the the idea that twitter would block a new york post url it's like ah such a jump ball like if it was the sex material i could understand them saying like you can't hack it that's against our terms of service for and we agree on that sex but in this case like i i don't know let's go to something more interesting

cause well heat wave i think and the drowning i know this is interesting to sacks but i think it's interesting to everybody else in the audience uh heat waves and droughts are uh just flash is hot in summer yeah i think this might have to do with global warming and be a little unique just i'm kidding i'm kidding 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 you your raw meaning what's your what's your what's your point of view on climate change the impact it will have on the planet and whether like urgent action is needed listen i'm not an expert in that area

i'm not going to pretend to be i do think that um that we can't save the planet by destroying the economy and it seems to me that too many of these save the planet people like want to take reckless extreme actions that would wreck our economy you just saw actually elon just gave a talk this and made news this past week from norway where he said that we still need oil and gas he's the leading innovator in basically moving i don't disagree and he said listen unfortunately we got to rely on oil and gas because it's too important for civilization if we cut the stuff off too quickly we end civilization yeah so look i mean i think

this is a long-term problem but and i think we need to have long-term global warming just full stop the planet is warming you agree with this it's not just about warming just just to use a different term that there are more frequent extreme events that can severely uh hurt people hurt the economy hurt the food supply hurt the energy supply all the things that you know i think were like all the way on the bottom of maslow's hierarchy like these are the things that are most critical that they're starting to get disrupted in a pretty severe way

you know i think that that's that's i mean that's the big question so sax it's i think it's becoming and this is where the transition starts to happen that a lot of people kind of say hey over the long run the temperature is going to go up by one degree celsius over a century you know who cares but there are the problem the problem is this is that you know and by the way whenever somebody like me points out how insane some of these policies are the topic has shifted to are you a denier of some science or other no listen my point is not about the science my point is look at the collapse of the sri lankan economy because they implemented these esg rules on

fertilizer look at what's happening to the dutch farmers who are being put out of work because of esg california california today governor governor newsom today said please don't use your electric power to charge your electric cars a week after they said uh gas cars are now going to be banned in the state and so there's a grid is going to go yeah there's a deep irony underway today in california because and fox news has obviously latched on to this story that that has to do with the grid though i mean look suspicious whenever whenever politicians invoke some crisis as the r as the

reason i'm talking about some political arguments i'm not talking about the political shock i've learned to distrust it that's the point and so i'm talking about you know what's happening in europe right now is obviously gas is through the roof because of the ukraine war the you know the price has basically gone through the roof and so because of that they're not able to produce fertilizer and one of the byproducts of the production fertilizer is co2 which gets added to the production of beer to make it fizzy well guess what the germans are not only about to run out of gas they're about to run out of beer

you think you think they're going to keep supporting the ukraine war when they find out that there's no beer for oktoberfest not not be able to eat they heat their homes they can't drink beer in october yeah this is the west sit down we got we need to sit down just taking up just taking apart just taking a beat for a minute like taking taking off the table the political response are you as an individual concerned uh about the the impact of a changing climate on people and on the economy and and are you interested as an investor in the private

market solutions to resolve some of those things that are obviously going to become market driven problems take the government out of the equation i i think there there may be a long-term problem here i'm not sure like how long it takes i definitely think i'm skeptical of this claim that you know the world's going to end in the next 10 years because frankly we've been hearing that since the 1990s i mean 1988 there's a great headline article by the way in new york times where it was like scientists in 1988 said that all the oceans all the ice caps will melt the

oceans will flood the land by the year 2000. so there is a credibility challenge associated with predicting you know kind of long-term outcomes like this that that continues to kind of foment unfortunately right yeah all my beachfront property would be underwater right now if all that came true um no i'm just kidding but no but but look it hasn't escaped my attention that many of the political leaders who are claiming that were facing an imminent threat of being under water in 10 years own beachfront property and fly on private jets so obviously you know i'm not saying this isn't a long-term problem but i do think they try to create an imminent crisis so they

can shove through a bunch of bad policies that are very destructive to them would you define what's happening with temperature and extreme weather as a crisis or not um yeah i mean there's there's a i would say there's a critical impact in um and will continue to be a critical impact in the food supply chain in um the quarters and years ahead because of what we're seeing so severe drought and heat wave in china right now um and by the way food is not the only one there's there's also the manufacturing supply chain so in the province of shechem in china they actually lost power because so much of the power is driven by hydroelectric pet

plants so uh streams and water flow has slowed down and stopped as a result there's less power as a result the factories are being shut down as a result key components for manufacturing in the computing industry and um and in kind of mechanical goods are not being produced at the rate that they were being produced before that has a ripple effect in the supply chain similar to what we saw in covent and then in the food supply chain we're seeing a drought and a heat wave right now we're coming out of it in the midwest in the united states where we grow corn and soybeans throughout europe and also in china and in china they had

70 days in a row of record-setting temperatures no water high temperatures the they're just starting to assess the crop damage it looks pretty severe there was massive crop damage in the midwest uh in the corner the corn belt this year um and then obviously european farmers are having issues and combine that with the geopolitical issues of the ukraine crisis and the natural gas pricing being so high one-third of uh fertilizer of ammonia plants have been shut down in europe and they think that ammonia and fertilizer production may drop by as much as one half in europe because of the crisis so energy

prices are so high you can't make fertilizer so that energy is being also redirected into other industry and support homes so you believe it's a crisis so i guess the question yeah people are turning on their acs in california this week you know you see that governor newsome just said our grid in california cannot support excess electricity consumption therefore one of the biggest variables is electric cars he's saying don't plug in your electric cars this week and that's because of record high temperatures they're about to hit california in two days so look everyone says hey these are kind of um anecdotal stories but no it's exactly statistically the frequency of extreme

things happening is continuing to climb and then the impact is in the food supply chain the energy supply chain and the manufacturing supply chain and there are follow-on effects now i'm optimistic that private market solutions will resolve these issues yeah that was my next question yeah of course i mean look we've had crises since the dawn of humanity i mean we were a starving you know we need a crisis to solve some of these problems these are pretty economically obvious yeah and that's that's my point the the private market will resolve because people want to have electricity they want to have food they want to have not

want to need they need and so so so the market will pay for those things and therefore producers and technologists will resolve to solutions to make that happen so we just have to have the pain and suffering and see it firsthand the market to kick in our friend in the group chat that shall not be named posted this meme you guys saw it right which said like an autistic school girl takes what was it i have it here quit school this is the dominoes you you can show the dominoes but basically it said an autistic swedish girl decides to skip school is the little domino and seven dominoes later

this huge domino it says the collapse of europe's energy grid and without commenting on the language used in the meme for a second what is the point the point is these conversations can so quickly go off the rails and are not about national security and economics and quickly become about moral virtue signaling that you miss the point the point in the united states just to be very blunt 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 through 2030 so between 2010 and 2030 the cost of electricity for every single american will have effectively doubled

even though the ability to generate particularly from wind and solar have been reduced by 90 percent now why is that well it turns out that if you look inside the p l's of these utilities it actually gives you the answer so over the next 10 years we have to spend as a nation just just on upgrading power lines two trillion dollars this is all cap this is all like crazy crazy opex right capex improvements for sunk cost investments our power line infrastructure in america is 20 plus years old 30 years old our generation infrastructure is pretty poor um we have all of these failures we

don't have enough peakers we don't have ability to store energy when we need it so if you add this all up i do think that there's a huge economic incentive to solve it and there are practical ways to solve it and that's what we have to stay focused on because if we allow the moral virtue signaling to get in the way we're going to make some really stupid decisions we're going to keep trying to turn off nuclear another thing that elon said you know we're we're not going to green light uh shale and that gas we don't have time for this if you actually believe this is a cataclysmic issue you need to basically be okay with hydrocarbons because it is the only

credible bridge fuel we have to keep the world working properly because otherwise what david said is right we are going to economically destroy parts of the world by trying to race towards this net zero goal by the way guys i just want to take the you know rip the band aid off 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 small incremental steps and many of them yeah this is that we should stay focused on that yeah the interesting thing and you cannot let people guilt-trip you because this is when you make these

stupid mistakes like the entire continent of europe made yeah it really does which is now going to [ __ ] here's the economies of that of that entire continent unnecessarily here's the good news all this virtue signaling and people wanting to be green and and for whatever reason all of that now economics and geopolitical is forcing people to rethink nuclear the diablo canyon nuclear power plant which is the last one in california that's operational it's being voted on today as we're taping this and it's expected that they're going to keep it online the governor with the great hair wants to keep it going and the fascinating part

about this is how choice does he have exactly and so now the awareness is so high about power and us losing it and asking people to turn off their air conditioners turn on don't plug in your cars but people people don't understand how nuclear energy even works and they're like get rid of it they went to a no nukes concert in 1978 and they haven't changed their position since but this is interesting this guy gene nilsson who's been a champion of this stuff he said i thought our chances were zero of keeping this thing open um and he said what's you know and he said he told this conference of attendees nuclear conference

that the effort to maintain it he said what's happened since you know the last six months has been like a snowball that everybody has changed their position just in the last year on shutting these things down and we saw obviously germany is re you know thinking the the three remaining of their six that they were gonna turn off they're putting back on and i think we're gonna see new ground broken and japan came out just in the last week and said they're gonna build more nuclear power uh and nuclear power plants now think about that that's awesome that's unbelievable they had fukushima the

germans shut off their nuclear because of fukushima but guys the japanese are saying we're building more guys fukushima didn't happen by accident there was a like an incredible tsunami which was triggered by once at 100 earthquake you're talking about these extremely long tail events yes the retaining walls could have been built better but these are things we find we iterate and we solve it was not the reason to shut down an entire mechanism of energy generation stupid mistakes where they put it just too low in the wrong place if they just put it up the hill a couple of miles it would have been fine but also if you look inside of what

happened there was enormous pressure inside of these companies to basically you know take take actual direct blame and responsibility i get all of that but these organizations were shamed into turning these things off that is not the way to make good smart decisions okay so uh gorbachev the last ruler of the ussr uh passed away this week saks robots yeah i mean i think this was a real milestone you go back to the 1980s and ronald reagan the who had spent his entire career being a cold warrior saw the opportunity to basically do business with with

gorbachev margaret thatcher had told him that this is a man we can do business with gorbachev had come to power in 1985 he had initiated reforms of the soviet system he was a communist to be sure but he introduced political reforms called glasnost and economic reforms called perestroika and reagan sees the opportunity to go meet with him and they signed arms control treaty after arms control treaty and ended the threat of mutually assured destruction that the world had been living with since the beginning of the cold war you got to remember that you know the cold war began shortly after world war ii and we had this doctrine of mutually

assured destruction or mad and the whole world was living under the shadow of nuclear annihilation this was showed repeatedly when i was a kid there was a tv movie called um the day after the day after it was serious it was really scary they terrorized us that america were all gonna die we had did you ever have nuclear uh bomb drills we had to get under your desk yeah i mean so yeah so if you're like our age you remember this that that movie by the way that that was a tv event movie that was one of the most widely watched movies but there were others you know jim cameron used this concept in the

terminator movies um you know it was something that people were really afraid of and reagan sees the opportunity he thought fundamentally that uh nuclear deterrence was immoral that yeah better to have deterrence than a nuclear war but that he if he could he seized the opportunity to negotiate the end of the cold war and by the way there were hardliners in his administration who did not want him to negotiate with gorbachev but they ended up doing a series of uh meetings uh it culminated in 1986 at the reykjavik summit and they signed uh deals to remove uh you know these these inf system deals now and that ended the cold war and then

basically what happened is in 1989 the berlin walk came down gorbachev allowed the wester the warsaw pac countries to leave and then in 1991 the soviet union collapsed so you know he gets a lot of credit for being willing to reform that system now the sad thing is if we were fast forward 30 years later where are we today we're back in a new cold war with russia i mean that we've been spending a good part of this year talking about the threat of a nuclear use and you know this was a problem that we thought was solved 30 years ago um and now we're back with it today and you've got to ask

have the successors of you know reagan and and and george herbert walker bush the people who inherited our foreign policy over the last 30 years have they done as good a job um as reagan did reagan ended the cold war we are back in a new cold war why what is the reason for this there's been a a a series of stupid policies that now have put the risk of nuclear war back on the table my interest in gorbachev is slightly different um he is an incredibly important character of the second half of the 20th century undeniable you know won the nobel prize as you said david kind of ended the cold

war but the most important thing in my opinion was the precursor to praero strika and why he did it and as you said like you know this is a fairly art and communist although he had really interesting views 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 young people from within all of these interesting things but the most important thing and he's written about this a lot is the reason that he embarked on perestroika was because ussr at the time had an incredibly poor work ethic terrible productivity and horrible

quality goods and i think that there's something to be learned by that because at the tail end of communism essentially where you had central planning central imposed economic principles what happened people did not feel that they had any ownership in the outcome no agency no agency whatsoever and i think that there's a really important lesson to observe there which is that if governments get too actively involved this doesn't just happen in russia it happens everywhere it's happening in california we just talked about it it's happening where we live right now and if

you look at then what happened afterwards it became the aristocracy that basically ruled the ussr before and then fighting against all these folks that wanted reforms and that created the schism which then perverted capitalism for you know seven or eight years through yeltsin until putin got there and that's what created the oligarch class and you know really exacerbated a bunch of wealth capture by a handful of folks that may or may not have deserved it and i'm not going to judge that but i just think it's really important to understand that he was forced to embark on this

because of all of these state central planning policies and so it's just an important lesson for americans in democracy which is be careful if you want more government you might need start work guys the soviet union their economy used to run on what they called five year plans it was incredibly centralized it was all run by the government and you know this was communism and the 20th century the second half of it especially was a giant 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 soviet union the warsaw pact it was also a battle of philosophies and systems it

was the philosophy of state control versus freedom and uh in a free economy and freedom won you know the free economy won in that battle and the crazy thing is 30 years later we're talking about socialism being a viable doctrine you have politicians basically saying that they are socialists but 30 years ago you would have been like that was unelectable and the point is example after example empirical evidence well documented of just how it doesn't work and i guess the thing is you know we all say like you just have to learn it for yourself you know like you'll tell your kids to do to not do something add inside i gotta touch the stove yeah they

gotta touch the stove themselves and get burned we are about to go do that in california can you imagine if like people who want to be social is here who bind us if they had to be in a food line or have rations literally russia had food lines and they were rationing food in the 1980s like well yeah that's how dysfunctional it got yeah a large driver of gorbachev basically negotiating these peace settlements with you know with reagan and this nuclear you know uh demilitarization was in part because he knew he couldn't fight right it was this was collapsing yeah they could not keep up reagan began

an arms buildup and there was an arms race and they were losing they were losing they were releasing and this is and this is why like people should not misunderstand what gorbachev was he was not necessarily some democratic freedom fighter he was a person who was observing the on the ground conditions of a socialist system decay their ability to compete and so he had to capitulate before it was forced upon him right right this is why i don't think he deserves as much credit as ronald reagan is because at the end of the day gorbachev would have kept communism going if he could have if he could have if he could he wanted the soviet union

to stick together i mean that's right but his but but i think to his credit when the things start to collapse he didn't silence and repression to try and hold it together so you know he was a he was a reformer he was a liberalizer maybe and a pragmatism didn't use violence but and ultimately he was a partner for ronald reagan remember ronald reagan began this gigantic arms buildup he was denounced as a cowboy who would get us in world war three but when he had the chance to negotiate a deal with gorbachev he took it and they basically got arms control and it was because reagan was able to sit on top of an extremely productive capitalist

system that allowed him to make those investments that made that capitulation basically a fata complete and i think that that's another thing for a lot of us to to understand which is free market capitalism removing these degrees of decision making give us degrees of freedom and i've said this before on the last part the great thing about the ira and what chuck schumer did is actually will be written in 10 or 15 years from now because when we get to energy independence when every home is resilient the national security calculus in america changes wholeheartedly overnight yeah i mean think about it years ago right but i didn't cancel it

okay wow listen uh no it's true if you're willing to use natural gas and fracking america is one of the richest energy countries in the world oh we produce a lot of oil too yeah i mean listen it it will change everything if we can really go all in on all of the categories nuclear uh if you let the capital markets do and the free markets do what they're meant to do they will empower the government to do great things for all of you all citizens yes i agree with that hundred percent and the reason we want to stop it is because we have a couple of examples of you know extreme wealth and i think that's something we have to think about

is like are the extreme is the extreme wealth created for a certain class enough to stop the prosperity train that we actually have in america listen jason the politicians in california think they can run fast food businesses better than the people who own those those restaurants these people have never 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 test which will show whether this state central planning can work or not and again if we refuse to want to listen to the examples of russia or all of these other countries that have tried this then so be it we will know

in the next three to five years that these policies actually don't work and actually that it actually accelerates the exact hellscape that they think they're trying to avoid but you know not only to my point about foreign policy not only are we forgetting the lessons of this cold war the economic lessons that a free enterprise system generates more wealth and prosperity and more national greatness more ability to fund a defense budget create a better economy not only does it do all those things we forgot not only have we forgotten that but also we have abrogated we have ended every single defense control and arms control treaty with the russians that reagan and

gorbachev signed why why why did we do that now our nuclear missiles are pointing each other again and you know what russia's a much poorer country in the us we're actually 15 times richer than them during the cold war at their peak we were only three times richer than them but we're 15 times richer but they still got over 6 000 nukes why did we get rid of all those arms control treaties why have we basically alienated them yeah you we talked we said it before like you're dealing with a pragmatist uh and putin's a kgb maybe you feel like putin isn't someone we can deal with now but he was someone

we could have dealt with 10 years ago 20 years ago we missed the opportunity to deal with him jason if he was a rational 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 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 too much power from that oil and over time that's the solution we have to be energy independent you know i think europe has learned that he was a communist he was an heir to stalin and yet reagan's could still do business with him and sign an arms control treaty so that we could end the risk of

mutually assured destruction you do not have to believe that putin is a good guy in order for us to avoid getting back into a cold war which is the situation we find ourselves in now how does it benefit us to have russian nukes once again pointed at our heads yeah i mean and the reason why the reason why we alienated him jason has nothing to do with him being a madman or whatever it is because we brought nato which he views as a hostile military alliance right up to his border and and by the way listen to this video from gorbachev gorbachev was asked about nato expansion in front of the us congress he was giving a talk to them and they asked

him gorbachev what do you think about nato and what did he say he said that you cannot humiliate a country this way and expect there to be no consequences gorbachev was against nato expansion when when basically george herbert walker bush and the secretary of state james baker went to gorbachev to argue on behalf of german reunification this is basically in 1990. baker made the promise to gorbachev not one inch eastward gorbachev said yes okay they can reunify but we do not want nato moving up to our border baker made that promise we have brought nato up to their border that is why putin regards us with hostility

yeah and i think europe regards him with hostility and they're scared of him because he keeps invading countries so yeah there's takes two to tango but hey this has been episode 94. it does it does take two to tango but you have to ask has the u.s foreign policy over the last 30 years that's gotten us in a new cold war with russia has that been a successful par foreign policy they have undermined all the good work that ronald reagan and gorbachev did together to end the cold war we are back in a new cold war and you need to find reagan in hollister you need to find a new right some blame putin has some blame but so does the us state department so does the

u.s state department and europe europe has a big part of the blame to here because he's their neighbor yeah for the sultan of science the rain man and uh reagan library chairman are you the chairman of the reagan library let me ask you this when you were a kid did you have a reagan poster in your room have you ever owned a reagan poster i'm sure i'm sure i've definitely owned a picture of of reagan and um ronald reagan listen jason wrong do you ever hang around reagan poster or a picture in your dorm at stanford yes or no listen ronald reagan that's a yes hold on a second ronald reagan won the cold war without firing a shot he gave us the greatest

economy the us has ever had he ended the inflation and stagflation in the 1970s and again he he avoided getting us into any of these major wars tell me the politician who if you could have lunch with anybody who is the historian who you revere who has a track record like that um yeah i mean i i guess one would say bill clinton you know would be the closest you know great president of our lifetimes right you would agree with that i think he's a good good president especially number two behind reagan in our lives remember he benefited from the economy that whatever reason you would agree with me clinton is right behind reagan reagan and clinton in since like

1950 something easily top two yeah right easily easily it's hard for their sacks to say hour was very good listen i mean but head and shoulders i think like for practically what they dealt with at their point of time amazing all right listen saks i know you love reagan and uh reagan i think that's what you should put you should be bringing nixon reagan and bill clinton one on each side of you for next week will you do that for us i gotta go guys i gotta go too all right love you sexy poop i love you all next time bye love you too happy birthday thanks bro we'll let your winners ride rain man david

and they've just gone crazy with it [Music] we should all just get a room and just have one big huge all just useless it's like this like sexual tension that they just need to release [Music] your feet [Music] i'm going on [Music]