All-In with Chamath, Jason, Sacks & Friedberg

Industry veterans, degenerate gamblers & besties Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg cover all things economic, tech, political, social & poker.

E123: Trump indictment, de-dollarization, should VCs back Chinese AI? RIP Bob Lee

E123: Trump indictment, de-dollarization, should VCs back Chinese AI? RIP Bob Lee

Fri, 07 Apr 2023 09:17

(0:00) Bestie intros!

(4:12) Trump indictment

(16:52) De-dollarization: What's real and what's overblown?

(39:35) Debt ceiling vote predictions

(56:36) US investors indirectly backing Chinese AI startups: should it be allowed? Saudi Arabia discloses VC investments as institutional US LPs cycle out of venture

(1:10:02) RIP Bob Lee, fixing San Francisco

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I can't see what's on your hat. What does it say? Super gut. One of my most exciting companies called Ohio. Oh, Mahalo. I still have No, not Mahalo. Unrelated, completely unrelated, nothing whatsoever to do with Mahalo. I remember Mahalo. Great product. Sorry, I didn't become like it. We were making $10 million in revenue at the peak. Yeah. At 100 people writing like human curated search result pages. Yeah. Look at Chatchee. You're great guy to reference the Chatchee PT thing coming out of that. Well, then what happened was they did the Panda update and we went from 10 million down to 500,000 in revenue overnight. What was the Panda update? They looked at who the top sites were. E how Mahalo, etc. And they just said nobody can get any more than this amount of traffic. And they literally throttled the number of unique users they would send to you. And that was it game over. And then everybody I knew at Google wouldn't return my emails. And they were like, we don't have partnerships with anybody. That's what Matt cuts to me. Are you saying that Mahalo's lack of success had nothing to do with the poor product and execution. It was Google's malfeasance. It got really rare reviews. It was backed by Sequoia. So did the movie. But it's so. You know, when you build a company that gets to 10 million in revenue in 18 months, you can talk to them up. But basically looking at your resume here, I see that you've created nothing in your entire career. When you get any arena. The arena and you actually build a product, then you can talk to me. I had the number one blog in the world, one of the top five tech magazines in the world. And this is the number one tech and business podcast. So good. I touched a soft spot. I got to the war of underbelly there. Jake how so rarely goes after Chimoff when he does. It's just gold. It's like it's a great. You're talking to three founders here, Chimoff. You're the odd person out. So when you want to talk about product, then make one. Okay. So gross. And yet I'm the richest. It's so guilty. It must tilt you totally fine. So Kim Jong Un, so Putin. Okay. There's a lot of rich people in the world. But these are three product. Okay, dictator. There's your cold open. Let's go. What your winners ride. Rainman David. And we open source into the fans and they've just got crazy. Well, you guys. We know. All right, let's get started everybody. It's been a big week. There's a lot to talk about. It might be a little bit of a controversial spicy agenda today here on the all in podcast with me again. The Sultan of science who is tearing up the YouTube comments. Everybody asking the Sultan of silence to contribute more and to speak more. But when he does speak, my Lord, he drops those knowledge bombs. How you doing? Sultan of science. I'm hanging in there. You're hanging in there. Okay. Well, I'm hanging in there. Man, if you were, it's I guess hanging in there. Okay. Great. With us again, of course, another Android David Sacks. Sacks. How are you doing? I am doing fine. How are you? Let me ask G.P.T. What's the question? How are you doing? Let me ask it. Hold on. Let me see what it says. I mean, basically, chat G.P.T. for is the ultimate asperer. There's equalizer. You guys are going to benefit most from this. I asked it. How are you? It says as an AI language model, I don't have feelings or consciousness. I don't experience emotions or states of being like a human does. However, I'm here and ready to help you with any questions or topics you'd like to discuss. How can I assist you today? That's pretty similar to how you feel except you don't offer to help anybody. Okay. Also with us is the dictator himself. I'm here to talk about topics looking forward to today's episode. And with us, the dictator with a shockingly, shockingly low cut. There's only one button on the shirt. Only one button. Okay. Made from a tiny Alba. Right here. Right here. They were like, should we put buttons in their life? Why put buttons? Why put buttons? And then conservation movement. Exactly. No, no, no, no. The one button is what counts. That is a baby Alba and O. Rinosaurus that was killed fed to Chimoff on his vacation and then attached to his linen shirt. I guess let's just get this out of the way. Trump was a reigned. I guess is the term he was charged in New York with 34 felony counts. A falsifying business records, Alvin Bragg alleged Trump orchestrated catching kill scheme as well to suppress damaging information before the 2016 election. Of course, Trump pleaded not guilty and did a feisty press conference or speech rally at more or logo after that prosecutor say the scheme involved falsifying business records to conceal payments to stormy Daniels. We know all that same thing Michael Cohen went to jail for the indictment wasn't a speaking indictment where it explained all the details. So Alvin Bragg hasn't tipped his cards by explaining in detail what the legal their desire and which information he has and he was pretty clear about that that he was not going to tip his cards, which makes us even more. Hard to understand what's going on and creates even more divisiveness predictably the right is framing this as a witch hunt but surprisingly many on the left including former sdny head pret. Barara of the amazing podcast stay tuned with pre which I love. He felt this was the weakest of the four major investigations that trunk is under and he expressed some concerns on his podcast that it was light and not detailed. And he might have not actually pursued this unless he had a 99% or something like that chance because it is the president's. Sacks I guess everybody's expecting us to fight over this but to just be a little preemptive here. As much as I think Trump is like the most ethical person to ever hold the office this does seem a little light and I'm hoping Bragg has the goods on him because why bring a Mr. mean a case. You know these are all I guess Mr. Meaners that are being elevated to felonies because of tax evasion possibly or election interference so. What what are you still man or just generally speak about the case here because I know that you are a man of law and water well many. People on the left are criticizing this case Jonathan Chate who's a liberal writer for the New York magazine wrote a good column about it and look here the reasons why number one the underlying behavior. Here is that Trump engage in a private settlement with stormy Daniels that's not illegal even if it is so called hush money that is legal you're allowed to do that. Number two is that he used personal funds to do it he did not use campaign funds and this is why Alvin Bragg has had to make this kind of distorted ridiculous claim that he should have used campaign funds to do it. But does anyone believe that if Trump had used campaign funds that would be alleged as the crime so he's kind of damned if he does damned if he doesn't hear I think that you know what the law is trying to do with these rules around campaign funds is protect donors from Canada's misappropriating them and Trump had every right to use personal funds to engage in the settlement it's a major distortion of campaign finance rules third. These campaign finance rules are federal laws they're not state laws so it's not up to Alvin Bragg to enforce them and in fact the feds looked at this and decided not to prosecute it because if they did they'd have to enforce similar laws against Hillary Clinton recall that Hillary Clinton had a problem where she used campaign funds to fund the payment to Christopher steel to write the steel dossier. And that was a real problem and it was miscategorized as legal fees and she had to pay a fine for that but no one talked about locking her up over it no one was talking about. You know in dining her and sending her to jail and so part of the reason why I think the feds. Didn't want to look at this is because they have to look at similar cases that are even more egregious and then finally the last thing is that we're well pass the statute of limitations on this whole matter. So Alvin Bragg is really out here on the limb he's passed the statute of limitations he's enforcing laws are not his business strength force they're distorted interpretations those laws and the underlying conduct here is fully legal. So I think everybody is kind of like wondering why he's doing this and I think there's two theories either Alvin Bragg is incredibly stupid which is not or he's incredibly smart. Yeah and the sort of three dimensional chess explanation that Ann culture has is that this is all a giant honey pot for Republicans because they're all rallying around Trump here because they perceive I think correctly that he's being railroaded and he's being he is the victim of a political prosecution. But in rallying around him to defend him you see that Trump's poll ratings among Republicans in the primary or going through the roof. Dessenses are going down and so what in culture fears is that this is all elaborate ruse to make Trump the nominee because Biden would much rather face a re election against Trump then against a young youthful vigorous governor like a dissent us. Do you think Bragg has a bunch of more information and maybe the tax evasion is the issue he'll go after because that seems to be the other theory here is he's not going to do the federal election stuff he's going to go after the tax evasion which is what they already got the Trump organization on when and why so I guess the CFO is going to jail for six months it's going to be hard to connect the one point six million fine for that company good. These are Mr. Meener crimes and to convert them to a felony the crime needs to have been done in the process of aiding and abetting another crime right tax evasion is the concept here. When he listed the bullet point list of all of the reasons that or all of his evidence. It seemed to point to a David said which is just these campaign finance violations yeah this whole thing just seems like such an enormous waste of time just think about the amount of money that will have to be spent on just securing New York city every time he shows up. The five car motor Cades the secret service the police the this the disruption to people for what really ultimately I think is right is kind of like you know it's a bit of like and this case should have been brought years ago well not at all in relation to that they were told to stand down from doing that because of the you can't indict a sitting president and that's pause so that's another legal. The area that's going to have to be tested Jason the feds looked at this years ago and they decided not to press charges they were told to not do it because he was a president no they were no that's kind of office now for a couple years why didn't they move forward. They were that was the process they were doing so that takes two years to the previous DA said he was told to stand down because the first man decided not to prosecute on the same underlying offenses that was his decision he decided not to. Who told him to stand down don't tell him to stand down yeah the office of sirens vans decided not to move forward with this very same case when the statute of limitations had not expired now it has an album brags move forward yeah you really have to stretch here. To come up with any kind of plausibility to this. To this case and I mean you have to wonder why he's doing it is a disnaked partisanship or are they trying to make trump the republican nominee well here's what van said on me the press. On the press this weekend I was asked by the u.s attorney's office in the southern district to stand down on the investigation. And they were asked to stand down as well because of the you can't indict a sitting president so anyway all this stuff is going to get done in the wash. I don't think we've to spend too much time on it because. We'll find out I think in the coming weeks do the democrats actually want him to get convicted then what he's going to be under house arrest and moral logo because he's not going to be sent to jail and then what then to Santa's actually will win the nomination so what exactly is the perfect outcome which is to create this theater waste taxpayer resources only to have trump acquitted just so that he can win the nomination and then he can go against Biden lose this seems so far fetched in idiotic move on closes chapter and move on totally this is ripping the country apart for no reason and such a stupid case such a stupid case what even the people who would like to prosecute trump like you Jason I think I'm a problem with it and one of the reasons why this is going to be counterproductive even to the the anti trump forces is that by going first with this case yeah Alvin Bragg is poising the well for any future case he might bring against trump because now all future cases against trump are going to be seen as painted with the same brush which is a nakedly partisan sort of which hunt there may be other cases out there that have more validity to them but they're all going to be seen as of a piece with this sort of Alvin Bragg yeah that was pre-exposition I think it's a logical and I don't disagree what do you think of the other three cases January six the interference in Georgia where they recorded on my tape and then the stolen documents in the obstruction of justice or do you think all four cases are politically motivated and none of them have any validity to them sex I mean look the question you have to ask is if Donald Trump was a private citizen who never ran for president would he be the target of any of these prosecutions I mean he was you know high profile business figure for decades and he wasn't prosecute like this and so that's really the question you have to ask and well this case actually had co-edigial co and did go to jail for the same crime so the answer is yes what Michael Cohen wasn't prosecuted till after Trump was president but you asked if if he was not you do really believe he would let me finish you asked if Trump was not a president if he would have been prosecuted for the crime in fact another person Michael Cohen was prosecuted for the crime and did serve jail time so the answer is yes he would have been and they brought these cases the banking kind of cases and they brought the other one for the 1.6 million fine and we so we're going to jail so I think they would actually but anyway I don't think you are I think this is I think that you think all four politically motivated is my question to you where you think anything I can't I don't want to comment on the other cases until I see what case is actually made with the merits of them are however I don't believe that all these prosecutors all over the country be looking at Donald Trump this way if he was a person who is a private citizen of a ran for office and I think we have a big problem in our political system when political disagreements are criminalized and this has been a nasty trend that's been going on for many years it was usually I guess practice against staffers you know here or there you'd have some you'd have some executive branch staffer would you know find themselves on the wrong end of a prosecution and they didn't go into jail maybe they get pardoned or not but now it's all the way to the top and we have presidential candidates basically being prosecuted and I do not believe they'd be prosecuted if they were not major political figures and it looks really bad for the political figure who is leading it right now in the Republican party to be Joe Biden's opponent in the next election to be prosecuted by one of Joe Biden's political allies I mean if this were happening in some other country United States be criticizing it as some sort of you know banana republic type move so this is not the direction we want our politics to go and look I don't I don't want to be the nominee I supported different candidate but I think that to be interfering in our elections for Alvin Brackley interfering in the political process this way is a reach and it's setting a horrible precedent for the future I mean we're talking about major presidential candidates let me ask a follow up question then said by local DA's I mean why would we want this so let me ask a follow question then do you the DOJ is currently investigating Hunter Biden and then obviously that goes up to the big guy with the 10% do you think the DOJ should be investigating Hunter Biden or do you think we should be giving a pass to presidential presidents and their families well the Hunter Biden case I mean this is one where you've got foreign governments basically paying off Hunter Biden for political access now that may ultimately be legal because I think influence peddling is kind of a business that takes place all over Washington but that actually does speak to the integrity of our political system at the end of the day would I send Hunter Biden to jail now I don't think so like I said I don't like criminalizing political disagreements but what Hunter Biden did was definitely pretty shady and for sure you know the and I think he's really a hundred Biden and Trump and his family are both shady is my feeling on it we get to get better candidates in here Nikki Haley your candidate to mothraised 11 million dollars this week she's on fire free break you want to jump into this and and touch the third really want us to move on all right so there's been a lot of Twitter back and forth about the D dollarization and if it's real if it's happening if it's not last week China and Brazil struck a deal to trade in their own currencies the Brazilian government announced the two countries will no longer use the US dollar as an intermediary I don't know if that's for everything they trade or for certain things they're trading it'll be a straight one for reyes trade China is the top US rival obviously and Brazil is one of the largest economies in Latin America what are your thoughts generally speaking free break I know that you have some exposure here you know with your company that I think you expect recently and you have some knowledge of the space right well I mean China and Brazil are pretty sizable trade partners I think it's around 150 billion dollars a year bilateral trade so China historically has made a lot of investments through their companies in railways infrastructure waterways ports and infrastructure to support the agriculture manufacturing economies in Brazil and it's a very deep tie obviously the closeness of that relationship China became a bigger trading partner for Brazil in 2009 so passing the US by the way China has had similar trading strategies in Africa in Australia they've bought several companies in Australia they've made massive infrastructure investments the currency of trade it's one element of a broader inter-quining that China has kind of enabled by using its resources to invest in infrastructure development and then participating in the economic value and gain that arises from that it still also supports the local country the local population the local economies in a meaningful way I think it's worth noting that the anti globalization moment that we're having in the US and it may be a longer term friend doesn't mean that globalization and global trade is going to slow down between China and other really important well resource nations around the world so the Brazil China summit that happened a week ago where a lot of Brazilian executives went to China and had a very deep set of dialogues but they also signed a ton of agreements on trade and also in some of those cases the trade being done in non-US dollar denominated currency is worth noting as being that if the US does continue to push for deglobalization we can only leverage our side of those relationships China will continue to make investments continue to develop trade and continue to develop really deep tie-ins with countries around the world from a resource perspective from an economic perspective and ultimately the leverage will sit with them on what currency folks are going to trade in so you know what we're seeing with the China Saudi discussion around the petro-yuan which doesn't seem to be really a standard thing yet but we're starting to see inclinings of some deals happening in Yuan but it's more related to the depth of the Chinese trade relationship with all these nations around the world so the more we kind of as the US think we want to deglobalize and reduce our trade relationships with other nations the more you know we're out of the way in allowing China to do that I think it's worth observing that the Chinese economy will grow the depth of their relationships will grow potentially the strength and importance of their currency will continue to mount as they build these really deep infrastructure and investment tie-ins around the world Tramoth what does a party trading in one due with the one did they buy a bunch of stuff from China what happens to the one nothing this whole thing is a huge nothing burger this is the third deal that China has done the other two countries are Pakistan and Brazil and the reason why is I've seen like people on Twitter now breathlessly rambling on about de-dollarization and all of this stuff and I think if any of these people would think from first principles the first thing that you would know is that the Yuan is pegged to the US dollar and so as long as it's pegged whether you trade through the US dollar or you don't and you directly go to Yuan your index to the US dollar and then you use a dollar swap to convert it into the currency you need so I don't know I think this is kind of like a lot of folks who don't really know what's going on what do you think about the depth of China's trade relationship so forget about the denomination of the currency but the fact that the statistics now is that you can't for the top trading partner with 120 countries you know they surpassed the US with many of these countries over the last you know decade or two in particular and continue to increase the scale relative to the US where we're kind of decreasing our dependence on nations and reducing our trading the reason why China has had so much dominance as a trading partner and the reason why China's central bank has the largest amount of foreign US dollar reserves about three and a half trillion dollars is exactly because of the thing that you want to ignore in order to have this high-faluting intellectual conversation it is pegged to the US dollar and until it is unpegged in a free-floating currency we will never know what the real market clearing price is and just so China has been able to hold on China has been very effectively able to manipulate this currency since they were brought into the WTO in order to engender that trading partner status they were able to artificially suppress the value of their currency so that exports from China could gain traction in countries all around the world you have to take into account this currency peg and you have to ask the question where would the currency be if it wasn't free-floating and then what would the incentives be for folks to replace the dollar and I think that there's a lot of interesting questions are that are worth asking but I think you have to be a little bit more intellectually honest to have the discussion and just for clarity Shemoth you said they already have these deals with Pakistan and Pakistan and Russia you met Pakistan and Russia I think they already have those deals with those two Pakistan and Russia right okay good I just want to make sure it's clear there sacks do you have any thoughts on this is is this an example of people just maybe taking the red allio book and it fits a certain narrative and over hyping it or do you think this is an actual real trend in the world to be concerned about I think D dollarization hasn't happened yet but I think it's a risk and I think there's a bunch of reasons why the risk is growing so first of all we have $32 and debt someone has to finance that debt and the bigger that number gets the more unattractive our debt is because they have to be concerned that we're eventually going to monetize the debt pay it back by printing a bunch of new dollars so that's point number one is we have these massive deficits and debts number two is that we have I think in the last couple of years really weaponized the dollar so if you look at like what we've done with Ukraine and and Russia we basically seized hundreds of billions of dollars of Russian reserves that were held in dollars we've excluded them from the swift banking system we've imposed massive sanctions on them and in fact we now have sanctions on a huge number of dollars all over the world so we're very sanctioned happy all of which makes these countries view the dollar as an unreliable store of value why would your store your money in something that can be taken away by the US and specifically by the state department so I think this is a major change in the way that we view the dollar last couple of years is we're going to use it as a weapon that again that makes it not the first time we've ever done that right we've done sanctions against many different we've done sanctions but as far as I know we've never seized foreign currency reserves and excluded a country from swift which the banking system so as as an instrument of US foreign policy so I mean I could be wrong about that but this was a major event what it happened remember we also did stuff like seize the the yachts and the foreign holdings of Russian oligarchs member there ill gotten gains we suddenly decided they were all gotten let me tell you we think they were ill gotten when those Russian billionaires were buying those yachts or buying New York real estate or one real estate or investing in Facebook or investing in companies here or buying sports teams or what have you so we didn't think they were ill gotten at the time that they were actually made and spent but we decided subsequently we're just going to seize those things well again if you are a foreign country or a wealthy person in a foreign country or decided where you're going to keep your money you may not want it to be liable to the vagaries of US foreign policy so I think all these things do matter and when you're running the kind of debt and deficits we have and you're making the US dollar less attractive you are running a risk that we should be keeping people we have disagreements with on the dollar standard because that's good in terms of power for us which I think opens us up to a broader discussion just to clarify this it's not even the dollar standard right like what this deal was is to use this thing called sips and sips is the non dollar competitor to swift and so you settle right across let's just say you have two trading partners in two completely different countries that use a bank in each of their local areas they typically swapped a dollars and they transfer right using this this backbone of the financial infrastructure called swift China has built a competitor to it called sips the C.I.P.S. and China's been going around and signing folks up makes a ton of sense right hey listen if we're trading between each other let's just use that so I think it's important to not paint this with more of a brush than it should be I'm not saying that D dollarization couldn't happen I just think that everybody tries to take one random data point and conflated all together to reinforce a redogal point from book three years ago I do think there's a group of catastrophes who maybe are maybe hoping this happens or it's great Twitter fodder I think we are ahead it for some sort of government debt crisis I said that there's going to be three prongs to this financial crisis one was these long data bonds having unrealized losses which is causing problems in regional community banks the second piece of it's the commercial real estate crisis which I think is metastasizing right now which is also going to be a banking crisis once all those unrealized losses come to you and the third piece of it is government debt crisis we have this thirty two trillion dollar debt that we're now having to refinance a much higher interest rates I read somewhere that half our government debt so sixteen billion is going to come to you sixteen sorry trillion yeah and it's going to be refinance in the next three years the average rate on that debt is one point seven percent well if you want to refinance that ten year rates you're going to be looking at some of the three and a half a four percent maybe more so you're looking at a doubling of the interest costs and I also read that by twenty thirty we're going to have over a trillion dollars of interest expense owed by the U.S. government every year that is money that's not funding anyone so security it's not funding anyone's health care it's not funding one weapons program it's not funny we want it's this the big it's going to be more than a quarter of our total federal budget yeah and this is where you start gambling when you're chasing that big payment you start taking risks this is also where you have to expect the fed will really want inflation to stay high I've sort of what we said before the only way out of this mathematically is to keep rates high but the other thing David that you when you mention all of this is what about every other country if you think that's the happening in the United States I think it's important to make sure we at least consider every other major economy because it's not as if they're pristine and only sitting on the sidelines while this happens to the U.S. this is my whole argument the whole time which is if you're going to have this argument you need to do it thoughtfully and relatively right because the euro is in the same amount of trouble if you look across it's not as if China is actually sitting pretty and smelling like roses either every major economy or trading block in the world is going to go through this at the same time so it becomes a relative trade argument and there I just want to know enough to know whether the U.S. is poorly positioned versus Europe or China but it just seems like you get back to a place where it's like OK we need to find the flight to safety what is the canonical flight to safety if it's not a commodity like gold it's probably the dollar until it's not. Yeah, freeberg obviously other countries have even more Q problems higher debt to GDP which means higher debt payments just rounding third here on this issue any final thoughts on de-dollarization and servicing our debt look it's not a problem and it's it's unclear the timing and the path but the arithmetic is pretty simple in addition to the point sacks made you guys saw the news the city of Chicago has a $44 billion pension hole that's just the tip of the iceberg on unfunded pension liabilities from both state government city government even private institutions this is again hundreds of millions of people worldwide that are expecting money coming to them from institutions that ultimately the federal government of the U.S. is likely going to have to backstop to some degree so that's another huge check that's going to need to be written that the federal government is inevitably going to have to write because we're not going to just let all these people have no money and come starving and social security right now is projected to go bankrupt sometime between 2030 and 2035 so we're going to have to write a check to cover the whole there plus the interest payment checks so much a moxpoint freeberg of like like other let me flip freeberg finish relative to other societies other countries yeah so the very likely case is that relative wealth will decline so in the near term I think it's inevitable we have higher tax rates I've said this before because in order to kind of meet the gap even if we have these austerity measures or reduce costs or reduce the budget as the Republicans are going to push for is the state ceiling debate reaches its apex in 60 days from now which you better believe this is going to be pretty pretty damn dramatic there's going to be real questions of what happens if the U.S. defaults on its treasuries if the U.S. defaults on obligations it has our treasuries there will be a real shift away from using those assets as the baseline of the risk free rate worldwide what what the net what the other thing will be I don't know I'll speak about the challenges I see with Bitcoin you know if we want to at some point but if you put all of this together you're going to have to source income somewhere you're going to have to take a piece of the assets and a piece of the income away from the private citizenry so you're going to have to tax and that tax will be used to kind of fill some of the hole and then more the whole will be filled by printing money and that will lead to this kind of inflation of asset values which ultimately means that the relative cost of things go up and relative wealth goes down and I think that's the point to take note is that anyone who's concentrated assets is going to have them effectively lost in the washout. I want to add a couple details are because three were went pretty quickly over a couple of examples so just to take that that Chicago case the numbers I saw in our call this week I think I was in the wall street journal was that 80% of the property taxes in Chicago are now going just to pay for pensions so 80% are going to pay former workers not current city workers and more over those pensions are only 25% funded. So they've already over promised by 75% benefits that they can't afford house is going to work and you saw that we just had an election there and rather than fix the problem they voted for a candidate Brandon Johnson who is even. So after on crime then Lori light foot and the reason for that is because the government workers unions basically all supported him so you have a situation in these blue cities and states where there is a massive civil service they are the strongest special interest in local state politics they have already taken huge appropriations out of the state budget in the form of these pensions which aren't even adequately funded we can barely afford them as they are. Should we have pension sex what do you think should we do you need for all these. Sure so what what happened in the 1980s when there's a lot of pension reform in the private sector is you move from. Defined benefit to define contribution so you start having more defined contribution like 401k the way that these public pensions work is defined benefit so you know what they'll do is they'll say that we're going to take your last year of employment with the city or state and what I'm going to do is you're going to get 80% of the money and whatever your whatever the amount of money was you made that last year you're going to get 80% or 90% of it for the rest of your not just your life but your spouse's life too and more over any overtime you earned it becomes part of that calculation so everyone knows this game and so what you see is in their final year. So the city employees will load up on the overtime or twice as much and that's a 90% of that they get 90% of that for the rest of them and their spouse's life we just can't afford to have rules like that they don't make any sense and so but the point is that the benefit that's been defined bears no relationship to the amount of money that's gone into these pensions right and so you have a simple solution here you have a huge amount of liability but to free burst point every blue city and state in the country. Is going to have this problem and who's going to pick up these expenses you bring up great points but you just mash them all together in this mashed potato of random things like unfunded pension liabilities you want to be a member of the mimebe reyes trading and they're like the same thing they're not the same thing they're driven by totally different but we're talking about this and you just kind of throw them in this like that a malgum soup and outcome conversation so I'm just saying like if these are important topics but I'm just saying I do think they're motivated by totally different things and they're not related as much as we think they are related I think they're related let me walk you through how they're related. So I want to hear how the reyes you want trade is connected to the Chicago pension system the holes need to be filled so the money is not going to just not get paid to the pensioners social security is not going to go away just like we saw in France if you start to do that you have a lot of contributions in the street there's literally bonfires and intersections in France in Paris today because people don't want to wait another two years before they get their pension payments so ultimately that check has to be written when you add up the column of how much money is not on the balance sheet today that is ultimately going to have to get paid out and the US government is going to print money to pay it out it indicates that there is a higher degree of uncertainty on whether or not I'm actually going to get the value back for the bonds that I'm buying in US dollar denominator form or that the US dollar is actually going to be strong enough to cover the cost or has enough kind of you know or has too much volatility because of this uncertainty and I think that that's going to be a great way to get the value back for the country where people start to say well maybe the US dollar isn't that risk free rate where it's a strong economy with a great balance sheet great economic growth there's certainly extraordinary potential because of the freedoms that we have to operate in this country as individuals through the enterprise through the innovation through the entrepreneurship through the attraction of talent from all over the world to come here but at the end of the day we do seem to have a very big set of checks that we're going to have to write and as those there becomes a real question on do I really want to hold dollars maybe I want to hold something else and maybe I diversify a little bit and maybe instead of holding just dollars I also hold other things and as that starts to happen you see a little bit of a shift it's not an overnight thing it's all catastrophic one or the other but it starts to bring into question whether the US dollar is the standard de facto system that's used for trade around the world that's the point and sax there is a solution to this super question is done in the UK and in Australia where you contribute your force to contribute to your 401k essentially but you get to learn how to put money away and you become a little more you have a little more authority over your future with these pensions where you're responsible for saving and you're forced to save and it seems to have worked really well in Australia and other places where people have great savings and you don't have this major debt load by the government doing it so it's something for people to look into sacks did you want to add anything to this be this one to death just make a quick yes I don't think we're just leaving it to death because I think it is a huge issue I mean look the part of Chimau's argument that I agree with is that you do have to evaluate the dollar on relative terms and you know you can argue that the US and the dollar it's still the you know this is called the most eligible bachelor in the leper colony you know nothing started falling off on the man yet but that doesn't mean that it won't that's really good that's really good by the way the first default might be the noses fall the economy has to hurt time one said that if something cannot go on forever it won't what we're doing right now cannot go on forever we are running deficit and debts and unfunneliabilities that we cannot afford and so it will stop and the only question is how it stops well I think there's yeah and it may stop in a way that is not not a voluntary choice by us basically yes I want to make a bet a friendly wager for charity oh what happens in June I'll make a bet with you guys you mean the debt ceiling yeah what what do you guys think happens you think this is going to be a fractious chaotic thing where the markets get royalled no I think is going to be a pretty rubber straight forward deal where they're going to it's going to come down to the wire but my guess is no I'm not going to want to default on the debt yep and there's going to be some concessions on spending and ultimately the debt ceiling will get extended and that those concessions on spending will allow the Republican party to save face with their voters and say look we we got some concessions here I'm not sure they're going to be enough to really address any of the major problems that the US is facing over the longer term but you know certainly letting the debt ceiling hit and defaulting is catastrophic everyone knows that I think the majority cases a bunch of hand-ranging and then they make a concession that are interested in this topic I would go use the way back machine and go and read all of the articles in the 80s where you could replace China with Japan and what happened with Japan is that Japan just hit a demographic wall not to similar to what China is about to be a big deal is that it's a good counter argument yeah that's a really good point and I think that there is this element of you know China as the primary threat but I think the the bigger problem Chimalt is that we have voted ourselves into a stupor we have allowed ourselves to accrue these liabilities that are in many cases not on the balance sheet that we simply cannot afford to pay and the social unrest that will arise what if and when we don't pay them or the economic of us actually paying them either of those are going to be pretty significant but that's under that water under the bridge and it has nothing to do with China it has just everything to do with how the US is spending thank you for being intellectually honest this is my point I agree with you about the importance of these unfunded liabilities I just completely disagree with you that this argument about these things being so hyper connected or that all of a sudden we're at the cliff of D dollarization I don't think it's rooted in facts and I think again it ignores this unbelievably important piece of logic that all of you guys that say this tend to ignore and it's still in it's not even well addressed in Dalio's book which is it is a pegged currency and the minute you unpack it none of you know what happens to it except that it probably isn't where it's trading today and if you actually then have to factor in dollar reserves that everybody holds that thing would skyrocket in value and it would crush the export value of the Yuan and it happens to all currencies and this is this funny thing that has happened to the United States which is that it ran forward and it transitioned its economy to a service let economy faster than other countries and other economies and other currencies did and nobody wants to just talk about that except is the fact that we're talking about that. That's what sort of drives us. Good. I don't think the big risk is that all of a sudden the dollar gets replaced by the Yuan as a world reserve currency. I think Freeberg lays out a more intermediate path which is people start to hedge their dollar exposure and decisions that used to be automatic like trading oil and dollars you know the so-called petro dollar now it becomes a little bit more of a decision. So you know the so that's what happened with the pound sterling it was a similar story and it was not an overnight collapse I mean there were certainly these kind of punctuated moments where they were hits but you know the history is that there was a slow devaluation over time and the you know as a result of obviously the economic pressure and the uncertainty actually know what happened to pound sterling was that it was pegged to the US dollar and then it became unpegged. So exactly what I'm talking about. No even post that. Even post that if it's a free floating currency. Yeah. You're proving your proving my point when Soros broke the back of the US dollar what he forced George Brown or what he forced the chancellor the extra do was to basically depag the pound and then yes you're right it's been like this ever since. Yeah. If you let it be free floating nobody wants to trade in that other currency everybody wants the dollar. That is the dollar is David's right it is the worst affected leper in the leper colony. Yes. This is why you have to have if you're going to be intellectually honest just have a relative conversation about all of the currencies and all the things that they're also going through which are also not not perfect. The debt payments for the emerging and the frontier markets are extraordinary just realize that if you want to go and peg your economy to somebody else's back. They also come with their own trials and tribulations that you have to risk manage as well. And now you have to decide on balance do you want to risk manage a centrally governed economy right from a central bureau or a freewheeling democratic like these are all the discussions of people should eat that. Yeah. There's a lot of choices there just back to the non currency part of this for a second there are a lot of like connections between these things I actually think there is a strong connection between what's happening for example in Chicago with the out of control civil service and the unfunded pensions all the way to the dollar status but there's also a connection between commercial real estate and these pensions. So on a previous show we talked about the commercial real estate looming crisis and a lot of people thought that you know some of the comments were just talking our book which is not true. I don't own I don't have a dollar investing in these office towers but you know who does pension funds. Yes. You know those office towers so you're talking about pension funds that are three quarters unfunded and they may have a lot less funds and they even think they do because we're about to have a huge reckoning were all of a sudden these office towers that were supposed to be blue chip that were supposed to have the best collateral there was in major American cities now all of a sudden they may not be nearly as valuable as they thought they were. Yeah and and if they don't own the building they definitely own the debt 100% for sure in the fixed income portfolios of all these pension systems are the debt that was used to finance these buildings by the reads and buy you know the big real estate funds that put those things together so you're absolutely right they are 100% impacted by what's about to happen. We're not we're not going to allow given the civil unrest and social unrest risk and obviously as a democracy we're not going to allow that all to go to zero and we're not going to let pensioners not get paid. Ultimately that's just a kiss of death maybe pension payments are reduced to some degree but again Paris is a really great example of as you start to try and shift the economic guarantees that have been made to pensioners even slightly. Yeah what was it two years in retirement 62 to move for a time and 62 yeah and it was certainly like you know you could sit here and argue what people for years for their whole life had this expectation set we have all for our whole careers invested in the social security benefits that were owed as retirees through every paycheck that we've received. And those social security payments may not end up coming back to us if social security is a lot to go bankrupt so ultimately the government has to set step in and issue new dollars to make that up the economic question is what happens to the value the dollar what happens to the value the economy and so on as you issued millions of dollars to fill these holes. Let me ask a question that's a little more positive here perhaps which is is there a path out of this you know death cycle we're in and what are the top ways in which we're going to get ourselves out of this I have three that come off the top of my head hold on I have three of the top of my head number one is austerity measures number two is productivity through technology and. Perhaps number three is maybe recruiting more entrepreneurs here to start more companies and you know fill some of these jobs so in but intelligent immigration which I want to record taxes yeah number one is higher taxes okay that's what's likely to happen. That's a standard. Yeah so look higher taxes because you can go after assets you can go after well so there will be higher taxes okay that's what I still think I still think we're will end up seeing 70% tax rates on the wealthiest people 70% I don't see I don't see it being like unpopular I think it's going to be unpopular with the wealthy it's going to be popular elsewhere to fill the whole second is cut back on spending but that's a really hard thing to do because you know as we've talked about in the past people vote to get more stuff so you put the politician is going to vote to get you more stuff you don't vote people in to go cut spending. So generally you know we're going to likely see number one happened first maybe they'll be a reckoning where you kind of reduce spending it's going to take extraordinary political will and an extraordinary depth of education and diffusion of understanding of this this key critical economic problem amongst the voting class which is a really hard thing to do. I think number three you saying get the public to understand to understand that we have to have austerity measures yeah and then number three and and basically people are going to have to make sacrifices so the first sacrifice will be the wealthy they're going to have to sacrifice through higher taxes the second sacrifice will be everyone else by seeing reduced spending and reduce kind of services etcetera the third is the hopeful one but we don't have a guarantee on this which is do we see. Economic growth through productivity gains can we create leverage with our resources and our people by using new technologies to get more with less and you know any time yeah like again I gave the example last time but when a tractor was introduced in agriculture all the people that were farming the ground didn't have a job anymore but what happened is new jobs emerge and making tractors and servicing those tractors in you know gas pipelines to get gas to the tractors all these economies emerged as a result of that economic technical innovation. So I think as we see a i another innovations hit the market. You know new economies and new industries hopefully. Really blossom and and we can benefit from that economic growth and also lower costs for people on purchasing goods and services we've identified for things when Reagan came in wasn't that wasn't the highest tax rate like like 70% yes yeah that was the top marginal tax rate 70% and 70% is not on her it will happen again in the US well and but Reagan unleashed an economic boom by flattening the tax structure because marginal tax rates created a distance center for people to work and produce more. And so there is a big economic hit from this yeah and remember what this 1970s were like it was the malaise days of Jimmy Carter we had a horrible economy with high inflation and everybody was paying high tax rates and the government wasn't making that much revenue because there wasn't as much economic activity going on. And during the 1980s we had an economic boom and the government actually collected more revenue with lower tax rates because so much economic progress was on law. Sacks we identified for things just like we've learned nothing which one is the most important here which ones are the most important we talked about austerity we talked about increasing taxes we talked about innovation and efficiency and then we talked about immigration recruiting were highly talented people when you look at those for you have any to add to that list to get out of this and which ones do you think are the most important and why when you look at. Look at federal tax revenue over a 50 year period go look at the Fred charts what you see is that quite independent of the top marginal tax rate the amount of federal receipts of the governments able to collect is roughly around 19% plus or minus 2% and so you can only get so much blood from a stone you can try to raise the top marginal rates but then rich people have an incentive to basically find more tax protected strategies so the history of the single back 50 years is you can only extract so much from taxes and what you're better off is a lower tax rate that is broader based and you go for economic growth that produces more activity but look if you if you're spending too much there's no way out of the way. So austerity critically important and entrepreneurship when Bill Clinton left office and I think Reagan through Clinton was the biggest 25 year period of economic boom we've ever had federal spending as a percentage of GDP was 18.5% he got it down from like 22% and he did a three economic growth and he bragged about it. So you know look where you want to be is I think federal spending should be in the low 20s I think you want tax revenue to be in the high teens 19% you have a small deficit those are the conditions for economic growth. So you want to take the complete opposite of all of this which is the anti chicken little version which is I think not much at all changes I think that jet debt to GDP will continue to rise not just for us but for every other country in the world whose fate is worse than the United States. And I think that on a relative basis the United States will continue to be exceptional and that this will not really be an issue in our lifetimes. Okay and I'm not saying that's a good thing and I'm not saying that's a just thing and I'm not saying that's what I want to happen but pragmatically I think that that's what will happen and I don't think that there is a magic number where all of a sudden things start to break where there's some magic. Number for jet debt to GDP were all of a sudden everybody finds religion instead I think that it just creeps higher and by the way if you look at where debt to GDP was at the turn of the 19th century and then what happened through the world war two what we've really done is you know we've retraced a lot as well so there have been moments where we've been out over our ski tips a lot. And so I think it's just important to keep in mind that sometimes what works just continues to work and I keep asking myself the relative question which is what country what economy what group of human capital is better position than the United States and despite all of the things that are screwed up with this country it's hard to find a better example. So yeah unless you happen to have the lucky mineral or oil club like Norway or Saudi Arabia you're you're going to be hard pressed to find a better place to plant your money and I think entrepreneurship and immigration are the two most important things we can do as well as a study and I think Joe mansion is like or these moderate candidates in the middle who might actually be able to talk about cutting but you said something you said something really interesting which is if you look at Norway Saudi Abu Dhabi. What are those countries effectively becoming by monetizing the oil they invest in all of the economies that are working perfect segue thank you it's not as if the Saudis and Abu Dhabi and the Norwegians aren't trying to invest in America they're trying to put as much money to work as possible they're just trying to pace it out so that they have time diversity and asset diversity. So to your point Jason so this is a sort of a bit of a self-fulfilling prophecy I think that what has worked continues to work and then the burden for disruption gets higher and higher that changes the same thing that work in the world having those natural resources or having entrepreneurship let's make a segue here. This is important discussion I think so Adam Adam Smith once said that there's a great deal of room in a nation meaning it takes a lot of local bungling to screw up something as big as a nation especially a nation that's the number one superpower in the world that has the world reserve currency so we are in some ways the beneficiary and coasting on hundreds of years of excellence of economic performance and great political. And great political leadership in this country and the question to ask is not whether we can still host on that but whether the political leadership we have today is living up to the standard we had in the past and I think it's clearly not and the only question is when it breaks and it's hard to predict exactly when it's going to break but what I do believe is that if we keep going the way we're going it it will have to stop well said we're definitely bending it right now and when you bend it sometimes it breaks right and by the way that's not the way we're going to do it. Right and and by the way the reason why we are going to pursue a I break next speed even though it may lead to some sort of weird dystopian future is because we need that productivity boost we have no choice now. 100 years so frankly better us than the next guy absolutely in the next. Whoever gets their first choice another perfect sound to two major stories this week that we need to discuss the first is Saudi Arabia's public investment VCRM. Took a very interesting PR step of listing their funds that they have backed and it's a significant list everybody from injuries and horror with Koto not surprising there and mark and Jason and Ben Harowitz and Adam Newman had a major keynote at a Saudi startup conference I was actually asked to keynote the next one in Riyadh which I'm debating doing and then in sync with that happening at the same time there's been a debate of should LPs in America be backing firms like Sequoia China Matrix China etc because those for firms are now backing open AI competitors and if we believe AI is the big race here should we as a country we don't we're not allowed to to back military stuff obviously in these countries but how do we on this global chessboard decide should we be taking money from Saudi should we be investing money in AI startups in China so i think trimathi got a big perspective here globally let's start with you two separate issues any surprises here by Saudi the kingdom actually releasing the list of who they're backing and why would they do that at this point in time and then us investing in China because we are at a moment here across roads and I think of should we be engaging or not engaging and building bridges with China and Saudi you know for obvious reasons looks at the rabia Abu Dhabi all of the UAE these are countries that are really important on the world stage and increasingly so because they manage peace and prosperity regionally now right they have huge balance sheets that can accelerate all kinds of projects all around the world and so they have to be taken seriously and so this is a very smart marketing move by the p if which is to essentially say look we are an established blue chip LP of the blue chip organizations that you're used to hearing about and celebrating and I think that's very smart of them because what it does is it reinforces the feedback loop that other great firm should be going to them to raise capital when it comes time for them to raise their n plus first fund and so I suspect especially now it makes even more sense because everything we've heard feedback mentioned in a couple of episodes ago the United States limited partner market is essentially closed for business they have huge misallocation problems the endowments are sort of closed the universities are closed a lot of family offices are licking their wounds and so this is a perfect time for folks in Saudi Arabia and the UAE to basically put the foot on the gas and basically tell everybody hey we are open for business so I think that that makes a lot of sense and I think that it'll be successful it'll work especially in a moment now where US dollar flows from US dollar limited partners are very difficult and order to come by well and we're also selling billions of dollars in weapons to the kingdom and we are a major partner of ours are valuable they're a valuable security partner of the United States they're valuable economic partner in the United States no different than doing business with any other country I think it's smart by the pdf on the other thing though with us firms investing in Chinese AI it should not be allowed and I do think that the folks that are responsible for syphias need to get a handle on this look I've done a bunch of deals where I have had to jump through a bunch of syphias hoops where explains syphias place so basically syphias is the committee on foreign investment in the United States now what that means is if folks want to invest in certain things that are on a list of things and I'll tell you the things that I've been involved with that that came under syphias rocketry and certain chip technologies are so advanced that the United States has very specific rules that limit the ability for foreign actors to invest in those businesses and in those situations where a few folks invested beside me in some of these companies we have to go through a process to get syphias approval before that investment was allowed now what's interesting about that is that's about money coming in but I do think that the reverse now becomes important because if us dollars are going to go and see these extremely complicated advanced technologies abroad especially into the hands of countries that are frenemies at best of the United States I think we have a responsibility to have a point of view on that and so I think Keith Roboi was the one that was very definitive and said they should not be allowed I do think it is so early Jason we talked about this we're on this curve of fuck around and find out which means there will be some crazy examples of stuff that are very uncomfortable I don't think we want us fingerprints on this stuff being perfected outside of us borders. When you look back on it the engagement with China created so much prosperity so much intertwined dependency iPhones being the best example possibly we're selling them in China we're making them in China China loses Apple as a customer that would be absolutely devastating for them and it would obviously be devastating for Apple as well. So when we look back on that as a general rubric here do you think we enabled a competitor or we avoided future conflict because of the interdependency and where do you sit in terms of thinking about engagement versus maybe isolation or something in between those two frenemies best of frenemies etc. The policy of constructive engagement as it was called twenty something years ago the idea behind it was that if we engage with China economically and help make them rich then that they would become more like us they would somehow turn into a democracy and they would have tremendous gratitude towards us and we'd become friends. It's not the way it worked out there were people who warned that this was a foolish approach so most notably the realist scholar John Mishima at the University of Chicago warned back in two thousand two that that was not the way this is going to play out if we made China rich they would seek to convert that wealth into political power and then they would act the way that all other great powers have behaved throughout human history which is they want to dominate their region and they would seek to push the world. It's a way to push the United States out of Asia and the future that he predicted twenty years ago is the future that's come true and I think the you know all the constructive engageers I think has some egg on their face now I understand where they're coming from this is a fundamental difference between whether you see the world in economic terms which is about creating positive some games basically trade or whether you see the world fundamentally in geopolitical terms which is about the balance of power which is more of a zero some game. And I think that both views they're both extremely important we want to engage in positive some relationships that generate more trade and more wealth United States at the same time we have to be aware and concerned about the balance of power we do not want a number two country in the world who can rival the United States in terms of power who basically could win a security competition with us and we certainly don't want a country in the world to be more powerful than us. So I think this is sort of the end in the Yang is geopolitics versus economics and I think what's happened with China the last several years is it's flipped I think we used to see the relationship primarily in positive some economic terms and now we see it in geopolitical terms and I think there's a lot of firms now in the United States who haven't embraced this new reality and to go back to your question about you know when should have entered capital from take money from a foreign country when it shouldn't I think there's a very simple. Rule for this which is if the countries of us ally I think it's fair game because the US has said this is a partner of ours so why can't you do business with them but if the United States government has said this is an adversary you're putting yourself in a really difficult precarious spot by doing business with them because then you have to explain yourself to the US government yeah this is the very simple rule we would use is I don't we would never consider taking money from Russia or China yeah any country. That the US government says an adversary of ours but if the US government says this is a partner in an ally then I think you consider it do you think there's a way sacks to salvage the the relationship with China and make it productive what do you think it's a far gone conclusion at this point because one might argue and I've heard people argue this maybe China would have invaded Taiwan already if it wasn't for the interdependency. So I know we're dealing with you know a lot of we're doing a lot of predictions here but do you think it can be salvage and you think it would have been a worse relationship if we hadn't had this interdependency that's been built up I'm not quite sure that the economic interdependence theory. Preventing war has been definitively proven if you go back to war one for example it was the case that Britain and Germany actually were each other's number one trading partners and they still got in war one for reasons that in hindsight seem really silly so I'm not sure that economic interdependence can prevent it certainly doesn't prevent security competition from arising and therefore I don't think it can necessarily prevent a war although it is a very important thing to do is to take care of the country and the country. Although you know having business ties can lead to positive interactions yes I'm just saying the jury still out on that. But I think that like I said I think once you're in a security competition the way that we are with China I think geopolitics rather than economics is in the driver's seat and freeberg intellectual way I think to process this you would never invest in a North Korean AI company a Russian AI company or an Iranian. How do you think about China and then just generally this topic of when to engage when venture capitalist when startups you know and trade partners should engage with various countries. How do you think about a freeberg in what role as an investor well we could we could take multiple roles here founder investor would be the top two for this program I think. Or taking money from any of those three very few portfolio companies that don't benefit some way from the trade relationship with China. So you know to sex is point I'm not sure you can really say China is a true and complete adversary in the sense that we're on opposite sides there's obviously deep interdependencies so you know it's hard to kind of say I draw the line at this kind of. Technology investing there but identified from their technology investing that's going on there in other ways with some of my other businesses right I think that that's really where you kind of run into a bit of a conangrum that we do have a deep interdependency. So you know like with respect to like investing in China I don't know I think the investing in China thing it's pretty difficult given that there is a single power that gets a distance. What does it doesn't happen I mean look at what happened with allie baba a lot of shareholders got pretty wiped out there these these governments where you have like. The potential of getting completely wiped out by government action is a pretty scary place to invest in general. Or oriented as an investor around those concerns that I am about you know it's really hard to do the calculus on am I helping or hurting America versus China you know you can argue 100 ways each of those sides what do you think of sex is framework if we're partners. You know fair game if not partners not a good idea to put your neck up. Are you asking like we're not partners with China well it seems like the US government has said we're adversaries now and that we're in a pretty dog competition well jack out this specific I'm talking about a situation in which you're taking money from them yes situation we're taking money I do think that selling them products. That are not like super strategic like I think selling them are most advanced chips is dangerous but you know I look I think if you're selling them products and help restore the trade deficit and correct that movie problem with that yeah I don't have a problem with. A selling movies or cars or something like that to China the question is though I think if you're a venture capital from do you take their money that's what I'm specifically talking about it I think whether you're allowed to or not. We don't because we just don't want to think about what complications I could cause down the road. Also getting your money out of China also a difficult task it seems these days cash app creator Bob Lee a K.A. crazy Bob on Twitter that was his Twitter handle stabbed a death the tragic read San Francisco earlier this week. He was scratched for our CTM he worked at Google on Android. He was a chief product officer at mobile coin also an angel investor in a ton of companies Figma space X Clubhouse well known in the industry offers responded at about 2.35 am to report of a stabbing 300 block. Of Main Street and arrived to finally who had been taking to a hospital and come to his injuries there no arrest has been made a lot of San Francisco. Politicians are sending their thoughts in prayers but obviously San Francisco is still very dangerous place it seems any thoughts on this and how it might act as some sort of crossroads or not and thoughts in prayers obviously to his family. I think this is a pretty tragic event there's a lot of people who I knew that we're pretty close with him I got several messages on his passing he was I didn't know him personally I think we maybe once twice he worked on Android at Google and obviously that up key role it's square in the early days and was a pretty impactful and important person but also supposedly I didn't know him very well again but everyone says just such an incredibly kind and generous person so. A tragic boss I used to live two blocks from where the event happened. I'll zoom out where is the freeberg is it a bad person so much that ring con center right by the big condo towers there and that's right with a sales force offices used to be. And you know block from the water front is it part of all that drug craziness no so it's not in the heart of the camping district it's just a nice area and so much quiet area right so at night there's no one there I went to San Francisco a few weeks ago I told you guys I pulled up to a restaurant. On the market arrow and I jumped with my buddy in the car I'm like oh my car is going to get broken into while we're at dinner because I'm parking on the street we went to dinner 90 minutes later came out. Course my car been broken into the trunk have been popped up it's just like. This is the fancy area so much to my very fancy area so look here's the thing if you park at a parking meter in San Francisco for eight minutes too long you get a sixty to a hundred dollar parking ticket. And San Francisco has become an upside down town what I mean by that is I think that like so much of the response that we've had in the last couple of years to power dynamics and concerns about the powerful having too much influence over those who are less powerful who have less influence and who suffer as a result of their to mean to influence. The response has been to turn things upside down which is to give those who were lacking in the power structure everything and to try and take everything away from those who are at the top of the power structure so if you want to deal drugs in the open air if you want to walk into Walgreens and steal thousands of dollars of goods and walk out nothing will happen to you because you were embedded with this power list kind of. In my position in life but if you have a car and you park at a parking meter and you say a parking meter for more than ten minutes you get a ticket and the consequences of responding to power dynamics by flipping the power structure upside down is obviously. Can be more negative as we're kind of experiencing I think acutely in San Francisco but also around the nation and by the way I think that the supplies and a lot of other ways in terms of how we're doing college admissions. In terms of how we're selecting people for jobs in terms of you know recent applications for pilots for doctors where the assessment is less about. Did the person who was disadvantaged at the beginning of their life or career or trajectory or educational path be given greater opportunity and greater resources to catch up and to get there or did we just flip the power dynamic upside down and just give them the end point. As a result there's a massive kind of detriment that I think can arise and it's not necessarily always the case that it will arise it is not necessarily the case that selecting someone based on some demographic profiling to be an airline pilot necessarily means that that airline is more likely to have airplane crashes but in certain cases when you don't prosecute certain crimes like robberies or. People walking into stores or breaking windows or dealing drugs in the middle of the street or camping on the street and you fast forward a couple of years that power dynamic the flip of that power dynamic causes the whole town to go upside down and everyone who's sitting on the bottom ends up becoming a victim themselves and I think we starting to see in clings of this in San Francisco we certainly have for years sacks is ranted on about this with respect to some of the non prosecution that's happened historically and I totally agree with him. On those points and I think that it's come to a breaking point in San Francisco but that's really a beacon for what else is going on and you know some people call it woke is I think maybe this notion of woke is is one small element or segment of the broader issue with how we are tackling with and dealing with embedded power structure issues in this world today and the flipping of those power structures upside down doesn't necessarily yield the outcome we all want and I think we're starting to see reasons why. That's my rant I can't disagree with you yeah so sorry for bird guy I didn't know bobby but I know many people who knew him and I was getting texts and obviously we feel really bad for him is whole family is kids is a father is co-workers friends. We don't know exactly what happened yet but I think we suspect and I would bet dollars to dimes that the story is very similar to a case we had an LA recently the Brianna comfort case where a young woman was basically stabbed for no reason by a psychotic homeless person who had been through the revolving door of the jail and criminal justice system who could have been locked up who is arrested multiple times that was not locked up because of this push for decarceration and you can argue that maybe it would be better for that person. Maybe it would be better for that person to be in mandatory treatment or in a even a maybe a mental asylum but this idea of just releasing these people onto the street. I just think is an outrageous abdication of responsibility by our elected officials who run the criminal justice system who pass our laws and the thing I just wish is that I could lock for 24 hours. The people like our supervisors or governor or the people who basically make these laws or the people who are pushing for decarceration of these violent offenders by these nonprofits I wish I could lock them up in a room for 24 hours with the people that they think are safe to release on our streets. Let's see if they really would take that test because it seems to me that these these elected leaders and these nonprofits are pushing for these outcomes they are setting loose on us a predatory criminal or psychotic element that jeopardizes our safety and makes these cities unlivable and we should not tolerate that and quite frankly the responsibility goes beyond those elected leaders it goes to all the voters as well because we keep putting up with this. And where is our governor when this happened he was in Florida doing some sing along at some high school where he was trolling Ron DeSantis because DeSantis is taking on D.I. at that school. So that's where Newsom was and he's extremely popular in California. Fighting culture wars instead of saving culture wars in a distant state. Instead of basically fixing the criminal justice system in California it's even worse than that because he's actually shut down to prisons and release lots of people so where is the push for criminal justice reform in California protecting this is in re and until the voters in San Francisco in California start demanding this there's never going to be a change. And at the same time. I can't disagree and this the supervisor seem to control a lot of this and. And the chair just a sweet mayor Francis was talking about on his Twitter the reduction in homicide shootings and they have literally counted the if you want to say a drug addicted mentally ill homeless there's obviously three or four different things going on here when you look at the population that's living on the street. Some number of them down on their luck some number mentally ill some number addicted to drugs and some number a combination of those things he seems to be getting it done in Miami and you know other states seem to another city seem to have gotten this under control is there any hope for San Francisco to moth or is this just going to take five or 10 years to bottom out I mean it takes for Jean change. I think New York had a long period of lawlessness where people were afraid to walk down the streets it took a handful of mayors to draw hard line in the sand. To increase policing. Sometimes to introduce some pretty controversial concepts at the time we're at the time that were supported which now seem controversial you're talking about stop asking for a think it was called the broken windows theory of policing. Yep take care of the little things so that the little things don't compound into the big things. But whatever you believe needs to get done. I think it's pretty clear that what is being done isn't working and so the real question is can people see through the naked partisanship to agree that this is not working. And sadly what I would tell you guys is that I don't think they're there yet and the reason is because America is the most divided it's ever been especially on issues of race and social justice and social norms. And I think that crime has gotten caught and painted with that brush which means that the idea of very aggressive policing and safety are now viewed as opposite and antithetical to social justice. And I don't know how that happened but the result of it is this which is these folks will never agree that this is not working and you'll have to go through recall election after recall election and even then it's not going to be enough because the smart politicians will say. What they want in terms of like safety matters but then a lot of voters will vote the opposite the example in Chicago that David brought up earlier is really interesting because it was essentially a social justice candidate versus a law in order candidate through their democratic ranks and the social justice candidate one. The progressive candidate one and the person that wanted to tax businesses and individuals one and the person that wanted to sort of focus on law and order lost. So what does that say it says that we are still in a moment where we can't agree on what is important. That's really scary and so I think you kind of have to unfortunately vote with your feet if you are lucky enough to do so and that's the case. Who's left over or a lot of people who are not in a position to just up and leave and then they are unfortunately left behind. So I think that's a very important situation all around and I will never host a conference or any event in San Francisco until this is solved because when people ask us to do events I'm like people don't want to come to San Francisco they're afraid so I do my events in Napa or in San Matanat. I'm a bilingual school Italian English that is on the IB system international baccalaureate system and it's a sister school to a school in the city we had a fundraiser which was literally right downtown in that encampment area. And when I pulled up I was like is this for real it's an open air drug market where folks are doing drugs selling drugs right in front of you. Completely incapacitated about a third of the guys are wearing balaclavas so you can identify them you have no idea what they look like I grew up in Brooklyn in the 70s and 80s when it was legit dangerous and when I walk in San Francisco it feels much more dangerous. And then that crazy era it feels random it doesn't feel like there's organized crime gang crime like I grew up in a pretty crappy neighborhood and you knew who the gangs were you knew who the tough guys were you knew how to avoid trouble it didn't come and randomly come and stab you to death right and so yeah Jason you become street smart growing up in a culture like that because you know how to avoid it you know how to be alert this doesn't feel like that this is just like a bad role of the dice and you could get stabbed. And you could get stabbed to death just walking on the street that does not. Where where are the politicians to stop this. I mean they don't care there's a level of corruption in San Francisco is unbelievable the incompetence amongst those supervisors the mayor the DA's everybody it's just incompetence and nobody has the hootspow the wherewithal to say enough. And I think the other group to blame are all the rich people and powerful people who just haven't been active in politics and I know some of us have. In different ways but I think it's going to take a coordinated effort by people who really care to vote out all the supervisors and bring in. It's got to be regime change and I just don't know if there's the wherewithal to do because every time as a person who has some means or is successful in some way that you stick your neck out there like you have done sacks. The the attacks that you will get from this insane left. I don't even use the word woke I think it's a different derangement I think it's actual corruption where they're making so much money offer this homeless industrial complex they're getting paid so much money that the grift is so deep. That they are going to fight for this and it's going to take some really courageous people like Gary tan and maybe David sacks and other folks to back a slate of people. To change this and we need people to run for government who are brave and want to put their neck out there and say enough is enough we're going to police the city. I just don't know if it's going to happen all right listen the issue is that it takes it takes more than one election so listen I think we made a positive change by removing chase of the d and I think brick Jenkins. Has the right attitude she cares about victims I think she wants to prosecute the issue is that you've got a police department that's 50% of the number of officers that they want because they flirted with this whole defund the police movement. You've got the board of supervisors and you've got an oversight board on the police that basically make their jobs harder and it's not it's not one election because even the mayor doesn't control it because the board of supervisors really has all the power in San Francisco. So they take a job that really should be one or two people's jobs like the DA like the mayor and they break it up into this like board of supervisors where you've now got to be familiar with a dozen different races in order to affect you to change well the machine knows how to do that but the average citizen doesn't so they make it really hard to affect you change but there are groups that are springing up in San Francisco like grow SF and you know people like Gary who are. On top of it and that's why just follow them and vote for their recommendations because they're actually cracking how to make a difference. All right think on that we will wrap for the dictator, Tremoth Palai, hapatia the Rayman David Sacks and the Sultan of science. Reped-owo of the world's greatest moderator will see its the allen 27 Reb дело live on. your winners ride. Rainman David Saunders. We open source it to the fans and they've just gone crazy with it. Lamy West,手勸 I belong I belong to Éacol Capital, I belong to Oh man, my hamlety ass will meet me at the place We should all just get a room and just have one big hug or two because they're all just like this like sexual tension but we just need to release them out What your heartbeat? What your heartbeat? What's the good news? We need to get merch these aren't ours now I'm going all in! I'm going all in!