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All right, everybody, welcome to episode 94 of all in. This is a summer, unprepared episode. There's not much news. We're gonna wing it. With me again in his golfing cap. The Rain Man himself. David Sachs. You do OK, buddy? Yeah, that's good. Yeah, alright. I'm kind of annoyed that we're taping on a Wednesday. You know, this is a slow Newsweek. 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. Whatever. I mean, listen, everybody has to get their burn off tax. Have you ever been to Burning Man? Yeah, I've been before. Did you answer that Burning Man? Really? He was there on threesome Thursday. I've been a couple of times. I think it's it's a cool experience doing worth doing, you know, once or twice in your life. It's not something I want to do every year, but I know a lot of people do like doing it every year. They're like really into it. I'm not really into it that way, but I think it was a worthwhile experience to go at least once you have you been. No. Freeburg have you been? I've not been. No, I have no desire. No, I don't like driving in the car for a long period of time. And, well, by the way, I'll tell you, I'll tell you why I don't really have a huge desire to go. I I don't really have a huge desire at this point in my life to want to do a ton of drugs. That's not, that's not just about that really. No, really. What it's really about is, are we joking right now? It's if you like art and you like music, it's amazing. It's amazing. I really, I really like art. I think I actually collect phenomenal art. In fact, I like to go to like freeze the Biennale. It would blow your mind goes here. No, no, no. You have no idea. The scale of the art there is tremendous. It is extraordinary. And if you're into music, we just can we just call it what it is. It started out as a festival that did celebrate art and creativity 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 the 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 people doing really, it's OK, it's OK 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. Can't do drugs. No. In the 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's on drugs. I mean, sure. I mean with neon. Neon. Those experiences are the best when you're sober. Best, best. You have to understand the great going to EDC sober. I've never been to DC, but this, there's a great filter here, which is you've got to drive 6-7 hours into the desert and you have to survive. You have to bring everything with you and bring everything out, you know, whatever. It is a bathroom, water, food. And it is harsh. I mean, it's 100 plus degrees in the day and it's 40 degrees at night. It's not easy to survive. It's hard. It used to be that way when when I went on, when I went, I went with a bunch of guys. You had the whole thing like wired in and they had like these yurts and it was like a whole community and they had like running water and a kitchen. And it was basically glamping. It was glamping. There are people that hard to survive. No there. I mean, it's hard to do that. There are people who glamp. It is hard to do that because you have to, you have to go with people who know what they're doing and are highly organized. So yes, they take months to set that trip. So yes, they spent the whole year, whatever, setting it up and it was really elaborate. And then there was an article like in the. New York Times basically saying that, you know, that they were ruining Burning Man because they were making it too nice. That was part of the problem. That's when I went. I went to the two. Nice experience. They wrote that about you? Yeah. Basically, you ruined Burning Man. Great. Thanks, sax. Thanks for ruining Burning Man. Let your winner. Rain Man David sack. We open sources to the fans and they've just gone crazy. Queen. I don't know if you've been following the NFT story. We'll cure that U as our next story openc the marketplace, the eBay of NFTS, if you will. The volume has dropped 99% since May 1st peak of $406 million in a single day. On August 28th, volume dropped to around $5 million, down 99% according to decentralized, a tracker DAP radar. On a monthly basis, opensees volume has dropped 90%. According to Dune Analytics, the floor price of a board ape has now dropped by 53%. If you remember, Openc raised 300,000,000. Had a $13.3 billion valuation December 2021 in a round led by CO2 and Paradigm. To put that in perspective, that was nine whole months ago. My, how the world has changed for what's your take on NFT's 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 were 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 month of this story which is fill in the blank asset class crashed? Yeah, this one scene. The question I have here, sacks is do you think that this is the end of the category though? Do you think there's a category ending and you think there was ever anything interesting here because you took you, you heard a lot of pitches like I did for how NFT were going to change everything, non. You know what? All. I'll say something because. I liken this to the point just to tie it back to what we just talked about. At the end of the day. You know, I think I've said this in the past, but like, what differentiates humans from all other species on Earth is our ability to tell, to communicate and tell stories and stories, 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, OK, I should pay 3.2 million for this piece of art and ultimately it'll be worth more. And that's the fundamental premise of markets is you're buying into something not necessarily always and this is such a minority now. It's scary. Used to be that you don't a piece of a business or 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 1000 times over. It's been repeated in the IC O 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 of markets. And I think the NFTS are really just one more kind of example where this beautiful narrative is 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 they're 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 that asset. And ultimately you can maybe trade out of it early, but still so much of it became about, well, the stock is going up. Therefore, if I spend X, someone else will spend Y and I'll make money on the stock with no underlying assertion of what's the productivity of that business. What's the return on cash going to be based on the cash flows coming out of that business over time or any of the fundamentals around it. And so, so much of our. Discussion and distortion has really been driven by this narrative fueling, and I think the NFT's are an example, but there are many others and we're going to see many more as long as humans have the ability to communicate with each other and you have any take on it? Yeah, I think Freeberg's mostly right. Like I do think that there is 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 men, the same NFT's and part of the art market, the same everybody that runs to you with why it's so different, I would just have a grain of salt and say you don't need to be different. Just enjoy it because you think it's cool. All right, we can go either to this California fast food. Range of story or we can go to Goldman Sachs. Workers are quitting on mass because Goldman Sachs is saying you gotta come back to the office five days a week. Where do you wanna go, Bush? 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 said that you know you have they are going to ban ice combustion engines I think by 2035. So you have to be battery EV and the new cells you can still have a new cell sorry yeah new sales which is the first in the country to do it. And just to go back to the 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 rigamarole. So California is always sort of led on climate. That was one thing. Then the second thing is they said we're going to create, you know, a state sponsored organization to set the minimum wage rates for fast food workers. Pause what we think about that. And then the third thing is that this congresswoman, I think. This assembly person, Buffy Wicks, passed the law 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. And depending on where you're lying on all these issues, it's like an interesting kind of lens in which we're like California is really becoming extremely, extremely legislatively active and basically imposing their will on free markets and the economy there. Yeah, and for people who don't know the fat, the fast food issue was they want to move to a more European style where instead of unions debating with individual corporations, McDonald's, Burger King, whoever. What they're going to pay their employees or employees having that discussion one-on-one. They want the state, some state authority to pick the amount per hour fast food companies pay and then I guess disintermediate the unions. It it's kind of confusing, but interestingly I've our friend Lorena Gonzalez, if you remember, she's the one who told Elon to, you know, F off. And was a former Democratic legislator. She introduced the bill when she was in the assembly. And so it's kind of a weird approach. I'm not sure why. The government. No, it's not. It's not. It's not discriminating. The unions she Lorena Gonzalez Fletcher, I guess now she's the former Democratic legislature who drove out of the state. Remember when she said, you know F Elon and now she works. Message received. Yes. And he left. Great. Great move for for the state. So she is now running. One of the biggest unions, and what she said, is that this bill will move California closer to the labor model used in Europe where unions negotiate. The unions are still negotiating for wages and work conditions, but in an entire sector with some sort of government board rather than company by company. So in other words, it's too slow to unionize. You know, company by company. They would just want to unionize entire sectors of the economy. Now the thing that's really crazy about this minimum wage. Proposal is that, like you said, Jason, it isn't just that they set a minimum wage, they created a ten 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 them. 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 ten 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 $22.00 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 it's kind of unfair in that some parts of the restaurant industry are being regulated and others aren't. Is there any justification here that you can think of to not let the free market do its thing? Friedberg? Well, if you represent the workers, you're saying, hey, pay them $22.00 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 advantage business because there was such an eager hungry workforce, people looking for work, people would come and work for nickel an hour or whatever. And so you as a business owner. Make a lot of money doing that. You could sell a product for a dollar, pay people $0.05 to make it for you. But nowadays those people are looking left, they're looking right, and they're like, wait a second, we are the business or we're 90% of the value of this business. And so a couple of 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 #2 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 #3 is that in the near term, consumers will suffer because prices will go up because someone has to pay for the incremental cost of running this unionized business and that will ultimately be the customer of that business. I'll say the fourth point is I am concerned about this sort of behavior in regulated spaces where the government has actually control. Over the market itself. So this is a good example of this is the, you know, we had our friend Ryan from Flexport on a few times, but you can't just start up a shipping company and have a dock. The docs 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 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 advanced 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 robotic coffee called. Fax not to talk our own book here, and the company really struggled during the pandemic, but they have two units at SFO chemaf. They're doing 70 to $73,000 in two units last month and I'm like, wow the 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. It's 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 overtime 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 given 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 Freebook said, which is that you will rebuild that business without those people because it is the rational thing to do. And so unfortunately, what you'll do is you'll take a bunch of people that should be in the economy, right? Think about like new immigrants or young people that are first getting on their feet. They'll take these jobs, you know? I mean, I've heard your joking. I worked at Burger King when I was 14. That's how I got my first. You, 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'm sorry, SAC, but I mean. You know that 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 raised 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. To benefit those individuals that got them elected over the short term. And there may be some real long term damage that results. Sachs is a part of this problem is that people are now looking to the government to solve their problems in life versus maybe looking internally to solve their problems and, you know, negotiate better salaries and more. Hold on. I think you have to give people a little bit more credit. Nobody was asking for them to step in like this. Look, this is as much for the politicians as it is for any of the workers. What's happening right now, the national restaurant. Association and all these restaurant lobbying groups are flooding the state, the legislators, the governor, with lobbying money because they want to get this bill modified, tempered or thrown out. And so this is basically a racket like, look, as a public policy matter, it makes zero sense for the same worker. If they go work at, say, Jiffy Lube or something outside the restaurant industry, they get the California minimum wage of $15.00. If they go to a mom and pop restaurant, they get the minimum wage of $15.00. But if they go to McDonald's, they now get a new minimum wage. Specifically for chain restaurants of $22.00, that simply makes no sense. There's no policy, policy rationale. But the real question you have to ask, and Toronto is kind of getting at This is why shouldn't it be $50.00? Why shouldn't it be $100? Well, the reason is because if you raise the minimum wage too much, then these employers have a huge incentive to replace that labor with automation. And so the unintended consequence of truth is talking about is that these big chain restaurants are going to rely even more heavily on automation now, and they're going to. Basically employ less of this labor where the price has been artificially erased for that sub sector of the economy from 15 to $22.00 for reasons that no one can really explain. So again, this is not for the benefit of workers, it's for the benefit of the politicians. Look, what's happening right now is all these articles talking about the lobbyists coming in, they're going to invite Gavin Newsom begging him to be their savior right now. And this is the game that the California Democratic Party plays. It's a one party state where they were basically business loves Gavin Newsom. Because he's protect her. He's a protection and of the extortion racket, Lorena Gonzalez gets this bill passed, which is basically incredibly damaging to these chain restaurants and they have to go running to Gavin Newsom and beg him to either veto it or modify it, temper the bill so it's not as destructive to their business. He's a protection in the extortion racket, but it's the same racket. This is a one party state and what they're doing with chain restaurants they would do with every sector of the economy if they could. It's just a matter of time and. What is the purpose of the California government? Like, are there things they could be focusing on other than this? Like maybe the free market settles this issue and they could extract benefits from the private sector from basically the wealth producing part of the economy and to line their pockets in the pockets of their supporters. You know that the typical government worker in California makes 53% more than their private sector counterpart. And if you factor in all the pensions that have been promised, it's 100% more. OK. So basically there's a huge wealth. That's for that's taking place where the where basically the legislators, the party, they are transferring wealth from the private sector to their supporters, their backers and freeberg 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. You're getting tired of it here. No. But, guys, that's exactly how it works. I mean, like, if you look at Gavin Newsom's run to the governorship, he paid his dues. He did the right jobs. He waited in line. He didn't, you know, rock the boat, independent of any of the things he did, right or wrong. And he had some pretty big moral transgressions. It didn't matter because it is about paying your dues and waiting in line because there aren't any meaningful challenges here. None. You know, LA in LA 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. You know, I had lunch with him at the Grove and people were coming up to him. He's like a celebrity there, 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 is up by like 5 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 this state. To change it. 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 door to door. The Republican hasn't. The Republicans haven't built in the states. Think about it this way. OK, 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. OK? 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, used the media platform. 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 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 hasn't the GOP invested in California? They don't think they have any shot because it seems like the Democrats are investing heavily in trying to flip, you know, look, there's a 2 to one quotation, there's a 2 to one party affiliation in California towards Democrats. So look, I mean, they're 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 + 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 anytime that there's a 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 nationally. Why? Why is that only true for California? I mean like in Florida, like the first person. Florida knows more people who work in McDonald's and shareholders McDonald's, and they're not engaged in a systematic takeover of the private sector. Philosophically, they're they believe in independence and businesses not being interfered by the government, right? That's a core tenet 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. What people will be more acutely aware of in a number of years is how expensive McDonald's has gotten. Because if the price don't know that, that won't be because, like, again, McDonald's has a very simple no, not, not even the market. McDonald's is not stupid. They understand how to use Excel, and so they'll think, well, I can amortize a robot. Versus actually jacking up prices because what McDonald's understands is the sensitivity of pricing to demand for their product. Yeah, that's right. I mean they are the most intelligent about how they price every anything at the sort of the lower end where you're capturing, you know nickels and Dimes. They are the most sophisticated in 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 franchise of McDonald's will still pay $1,000,000. For franchise fee, but we'll give we'll be given a bevy of robots that they run from 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 1/3 to 1/2 of the value increment because of the delivery of that technology, the productivity increment. So let's say that it costs $1215.00 an hour to employ a McDonald's labor today. And let's say that you can build technology that the amortized robotic cost is $10.00 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 loud eightish, but, you know, there's going to be 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 is basically become a state where the only middle class are basically the government workers who, like we talked about, are making twice as much as their private sector counterparts. It's a state where you have the very rich and very poor and the only middle class are government workers. That is what we're creating. The rich and the state have done really well over the last few decades. Why? Because of globalization. So you take the two big industries in the state, tech and Hollywood entertainment. They have benefited enormously through globalization because now you can sell software or you can sell movies or music. Exactly. So now these these industries have become, you know, massive global exports. And so if you're in those industries in California, you've done really well because now. Your market is the whole world. So the Super rich have done really well. That's funded the state, that's allowed the state. It's almost like a resource curse to have all 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 I just want to show you guys a quick video. We'll just play for five seconds here. We had invested in this company, got sold. I'm not gonna be able 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 are doing high speed picking of tomatoes and berries. Like this is a 2 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 510 years of a lot of these jobs, we're talking 10s of millions of manual labor jobs being gone and and we're going to look at this moment in time where we try to squeeze an extra 10 or 20% out of these, you know, employers. And then you going to see these employers say, you know what, 24 hour a day robot. Yeah, it's a little bit up front 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 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, Sachs or Chamath. Do you remember the first robotic or AI company you invested in and how long ago it was? 2014. 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 to our book, which is I think people misunderstand that Moore's law. Has actually not ended. And this is something that. A friend of mine, Adam D'Angelo, characterized to me beautiful human being from work together. He, well, he was a CTO Facebook when I worked there. So we, this is, you know, we, we've known each other for 1516 years and now he's the CEO and founder of Cora. 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 solved the GPUs and so that's why. The the surface area of compute of innovation has actually shifted, Jason, to what you're saying, which is, you know, all of these new kinds of machine learning 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, Dolly. Sorry. And more sophisticated things like GPT 3. 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, and you think about the data sets adding to that. And so when 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. The the data sets as the other issue freeberg you look at, you know, the the data sets that are available to train. So you have the GPUs still escalating massively in the amount of computer power can do. You have cloud computing at the same time, and 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 eye 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, the Inflation Reduction Act, you know, we granted CMS and Medicare the ability to negotiate drug prices, and we actually also capped the total prescription cost that any American can pay at $2000. Now, it turns out that overwhelmingly, most Americans will never spend $2000 a year on prescription medications. But there will be a few. And they bump up against drugs that cost millions of dollars. So there was a, you know, there was a drug for, you know, SMA that's like, you know, 2.4 million and like, you know. Beta thalassemia of like 2.8 million and we will all bear the cost of that. Now if CMS and Medicare go on, really crunch those costs. What is pharma going to do? Well, Pharma is going to do what is the obvious thing, which is like, if you're going to cap what I can make, I have to completely change my R&D model and they're just going to use alpha fold, you know? And what it's really going to do is potentially put a bunch of research scientists. How to work. And those are folks that should probably in the, you know, for our general future, be gainfully employed. But the nature of their job is going to change completely because the economic capitalist incentive of big Pharma is going to move towards technology which is, you know, an alpha fold. And their protein library is the equivalent of AI and automation for McDonald's. So this is where, again, governments have to be super careful that they understand what's actually happening because they're creating incentives I think that they don't completely understand. Alright, we can go to raw meat for sacks Zuckerberg's admission of FBI meddling. Truth, social, disputed me and, like, how dare you imply that J Edgar Hoover and Jim comedy's FBI is politicized? Remember, you guys were debating and it was about the investigation. You didn't. But some of you were saying, I can't believe that you're part of the 35% of Americans who don't believe fully in the rectitude and integrity of the FBI. I don't know if this is FBI man outcomes this bombshell. I mean, you got to admit this was a bombshell bombshell. OK, so Joe, Joe Rogan had Zuck on, and he asked him about this very specific thing. Remember the New York Post story on Hunter Biden's laptop? And like, the week or two before the election was censored, right? And there was a very controversial thing because the FBI was dealing with known Russian interference and hacks and all this stuff, part of which Trump was like asking people to hack other candidates. OK, you're not even setting this up correctly. Well, OK, I'm gonna keep going. And then so this is what Zuckerberg said. Hey, look. What's. Exact moderate this segment. Well, I mean, I'm just gonna read the Federalist, which is, you know, super right wing. But he says I'll just read you what Zuck said because that's says it all. He says, hey, look, if the FBI, which I still view as a legitimate institution in this country, I'm quoting from the Federalist, which is quoting him from Joe Rogan. It's a very professional law enforcement. They come to us and tell us we need to be on guard about something. I want to take it seriously. So when the New York Post broke the Hunter Biden laptop story on October 14th, 2020, Facebook treated the story as potentially misinformation. Reported 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 UN quote meaningful and a follow-up Rogan asked if the FBI had specifically said. Quote to be on guard about that story meaning the laptop story after originally responding no Zuckerberg corrective says. I don't remember if it was that specifically, but it was basically the pattern. So basically I guess you would agree sacks, Zuck didn't know exactly what to do here with this information and if it was real or not. Which you know it turned out to be very real and it probably could have swayed the election. I mean I do think if people thought there was a connection between Hunter Biden maybe it could have. I don't know if we want people being hacked. To do that. So what's your take on it? 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? Should. So yeah, here's the complicated issue, right? There's many vectors. Yeah. What? Zuck basically says the FBI came to to them and encourage them to suppress this story or to suppress a story that they described that would be just like this. OK. 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 Russians information, you need to do something about it. You would have listened to the FBI. He believed the FBI. My point, and so I don't blame Facebook too much for that. I think it's understandable that he would have believed that 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. OK, now it turns out that the FBI, by the way, the. Maybe I had the hard drive. They had the hard drive for over a year. It was an image of the hard drive with the actual hard drive. They had the actual hard drive. The leak of the story was was likely prompted because the FBI didn't appear to be doing anything with the hard drive. So somebody leaked the story to, you know, to Rudy Giuliani and then he leaked it so forth to New York Post. But the point is that the FBI had the hard drive, so they knew it was authentic. OK, so they knew that this hallmarks of Russian disinformation was not the truth. Because, again, they had the authenticated hard drive in their possession, and yet they still went to Zuckerberg and basically played into this narrative, this phony narrative that, you know, Democratic partisans like Clapper and like Brennan had created. It was meaningful, by the way, about what was on the laptop in your mind. Like, do you think it's relevant or do you think we want people's laptops being hacked like this who are in people's political families? 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 people's personal pictures, you know, and stuff like that be reliever, like the part where they were showing a hunter Bidens, you know, drug use and the other personal stuff. I thought that was scurrilous and I didn't. I didn't like it and I didn't think that was particularly germane. So I think, and I think it was an invasion of his privacy. However, there were materials on there related to his business. Millions in Ukraine, and I don't say see how you can say those weren't relevant. Investigating 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, so look, my point, my point is this, that I I can agree with you about. The personal stuff about Hunter Biden shouldn't have come out, but but with respect to the Ukraine stuff, that was legitimate, it was fair game and the and most importantly, I don't know whether would have won the election or not. Probably not. Probably by itself it's not. But the real point here is that the FBI went to Facebook to censor a story that they must have. Known was true because they had the laptop in their possession. They should not be intervening in elections that way. That is the bombshell here. That's unbelievable. I think they didn't know the Providence of this, but I guess we'll find out. Where are you landing? Province of a hard drive that's in their possession. And have an FT exactly where do you? How are you? Exactly. That's exactly audience wants to know. Sax 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 that he did in fact have a ton of really sensitive stuff, like it's not? Antonio, really sensitive stuff. Yeah. I mean, he wouldn't give it back. Like, what's your what is your other pages of documents? Smart, 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? But the fact that he wouldn't give it back, by the way, I've 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. Find out every document they stick in front of the president or not every, but many of them are more classified. So let me ask you, this is aside from these like kind of details what, what is, what is Trump's deal that he just wouldn't give them back to? 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 once the original copy of those letters with little rocket Man, and he doesn't want to give them up. And you're literally 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 to Trump. Just give it all back. It's so dumb. But why would the FBI feel the need to do a raid? Because, by the way, Remember 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 him 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 say. My real concern is the politicization of the FBI. Our law enforcement agency should not be weaponized by either party to pursue their you believe they are at this point it 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 inexcusable. 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 1st 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 1st amendment. We thought, remember when Jack Dorsey said that he regretted the censorship that Twitter did and he came out with that. Apology. We thought it was just Twitter's decision. Now we find out from Zuck that he was leaned on by the FBI and I think that these big tech companies like Twitter, like Facebook, they're going to have to have a new policy, which is when the government says we want you to censor something, their response needs to be show us a court order. They are not just censor now based on the say so of some operative from the government. I would agree with you. I agree with you on that. I think it was a bad decision obviously. The one big tech company that really nailed this, I think was Apple. You know, very early on they drew a really hard line in the sand with the San Bernardino shooter because they said if we allow the FBI to get into this person's phone, even though you know what he did was completely heinous, we are going to create a backdoor that will become an exploit for everybody. And we are drawing the line on privacy and security now. Different set of issues, but it just goes to show you there have been a few examples where some of these companies. I've 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, whatever, but it didn't come with they they were able to stand up to the pressure. So I think there are some examples sacks, where you you can say, no, I mean the the idea that Twitter would block a New York Post URL, it's like such a jump ball. Like if it was the sex material, I could understand them saying like you can't hack it, that's against our terms of service for and we agree on that sex. But in this case, like, I don't know, let's go to something more interesting. Well, heat wave, I think in the drowned. I know this is interesting to sax, but I think it's interesting to everybody else in the audience. Heat waves and droughts are just use flash. It's hot in summer. Yeah, I think this might have to do with global warming and be a little unique. I'm kidding. I'm kidding. I'm kidding. For all the SG people get into sacks and say, you know, you're you believe in global warming. Do you think the death of Gorbachev is a big story? Dying is a big story, too. But let's give free burkis science corner, and then we'll come back around and give you your raw meat. That's 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 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. I don't disagree with you but but and he said listen, unfortunately we gotta rely on oil and gas because it's too important for civilization. If we cut the stuff off too quickly we end civilization. So look, I mean I think this is a long term problem but and I think we need to have long term solution global warming, just. The the planet is warming. You agree with the science. It's not just about warming, just just just to use a different term that there are more frequent extreme events that can severely. Hurt people, hurt the economy, hurt the food supply, hurt the energy supply, all the things that, you know, I think we're, we're like all the way on the bottom of Maslow's hierarchy, like, these are the things that are most critical, that they're starting to get disrupted in a pretty severe way. You know, I think that that's that's I mean that's the big question. So sacks it's I think it's becoming and 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 1 degree Celsius over a century. You know, who cares? But there are kind of the problem. The problem is this is that, you know, by the way, whatever. Whenever somebody like me points out how insane some of these policies are, the topic is 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 SG rules on fertilizer. Look at what's happening to the Dutch. Farmers are being put out of work because of the SG rules. California today, Governor, Governor Newsom. They said, please don't use your electric power to charge your electric cars. A week after, they said gas cars are now going to be banned in the state. And so there's a grid is going to go. There's a deep irony underway today in California because and Fox News is obviously latched onto this story that that has to do with the grid though, I mean. Look, I've become suspicious whenever, whenever politicians invoke some crisis as the as the reason I'm talking about political, I'm not talking about the political. I've learned to distrust it. That's the point. And so I'm talking, 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 is 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 gonna keep supporting the Ukraine war when they find out that there's no beer for Oktoberfest, forget not be able to eat, eat their homes. They can't drink beer in October. This this is the. When you sit down, we got, we need to sit down just just taking up, just taking up, just taking a beat for a minute like taking, taking off the table, the political response. Are you as an individual concerned about the impact of a changing climate on people and on the economy and 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 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 that continues to kind of ferment, unfortunately, right? Yeah, all my beachfront property would be underwater right now if all that came true. Now 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 imminent threat of being underwater in 10 years owned beachfront property. And fly on private jets. So obviously, you know, I'm not saying this isn't a long term problem, but I do think they try to create an imminent crisis so they can shove through a bunch of bad policies that are very destructive to the environment. Would you define what's happening with temperature and extreme weather as a crisis or not? Yeah, I mean there there's, there's a, I would say there's a critical impact in and and will continue to be a critical impact in the food supply chain in the quarters and years ahead because of what we're seeing. So severe drought and heat wave in China right now. And by the way, food is not the only one there. There's also the the manufacturing supply chain. So in the province of Shishan in China, they actually lost power because so much of the power is driven by hydroelectric. Plants. So streams and water flow has slowed down and stopped as a result. There's less power as a result. The factories are being shut down as a result, key components for manufacturing in the computing industry and and and and the kind of mechanical goods are not being produced at the rate that they were being produced before. That has a ripple effect in the supply chain similar to what we saw in COVID. And then in the food supply chain, we're seeing a drought and a heat wave right now. We're coming out of it in the Midwest, in the United States. We grow corn and soybeans throughout Europe and also in China. And in China, they had 70 days in a row of record setting temperatures. 70 days in a row every day was a record. No water high temperatures, the that they're just starting to assess the crop damage. It looks pretty severe. There was massive crop damage in the Midwest in the corner, the Corn Belt this year. And then obviously European farmers are having issues. And combine that with the geopolitical issues of the Ukraine crisis and the natural gas pricing being so high, 1/3 of fertilizer of ammonia plants have been shut down in Europe and they think that ammonia and fertilizer production may drop by as much as 1/2 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 there, yeah, people are turning on their PC's in California this week. You know, you see that Governor Newsom just said our grid in California cannot support excess electricity consumption. Therefore, one of the biggest variables is electric cars. He's saying don't plug in your electric cars this week. And that's because of record high temperatures are about to take California in two days. So look, everyone says, hey, these are kind of. From anecdotal stories, but no, it's actually 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. That was my next question is, can we solve this or not? Yeah, of course. I mean, look, we've had crises since the dawn of humanity. I mean, we were 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 need they need and so so so the 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 pain and suffering and see it first hand, the market to kick in our our friend in the group chat that shall not be named posted this. Meme. You guys saw it, right? Which said like an autistic schoolgirl takes, what was it? I have it here at the Domino's. Knows you, you can show the dominoes. But basically it said an autistic Swedish girl decides to skip school. Is the little domino and seven Domino's 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, signalling that you missed the point. The point in the United States, just to be very blunt. Is that the cost of electricity has gone up by 46% in the last decade. It will go up by another 40 odd percent through 2030. So between 2010 and 2030, the cost of electricity for every single American will have effectively doubled, even though the ability to generate, particularly from wind and solar, have been reduced by 90%. Now why is that? While 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. Has a nation just. Just on upgrading power lines. $2 trillion. This is all cap. This is all like crazy. Crazy OpEx, right? CapEx improvements for sunk cost investments. Our power line infrastructure in America is 20 plus years old. 30 years old. Our generation infrastructure is pretty poor. We have all of these failures. We don't have enough peakers. We don't have ability to store energy when we need it. So if you add this all up, I do think that there's a huge economic incentive to solve it, and there are practical ways to solve it. And that's what we have to stay focused on, because if we allow the moral virtue signalling 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, shale and Nat gas. We don't have time for this if you actually believe this is a cataclysmic issue. You need to basically be OK 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 raise towards this net zero goal. By the way guys, I just want to take the the, you know, rip the Band-Aid off. Net 0 by 205026 it is not possible. There is 0 credible plans that the world has to do it. So we have to take small incremental steps and many of them. Yeah, this is and we should stay focused on that. 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, which is now going to cripple. Here's the economies of that, of that entire continent unnecessarily. Here's the good news. All this virtue signaling and and people wanting to be green and and for whatever reason all of that now, economics and geopolitical, is forcing people to rethink nuclear. 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. Heard about this is how quick choice does he have? Exactly. And so now the awareness is so high about power and us losing it and asking people to turn off their air conditioners. Turn off. Don't plug in your cars. But people, people don't understand how nuclear energy even works and they're like, get rid of it. They went to a no nukes concert in 1978 and they haven't changed their position since. But this is interesting, this guy, Gene Nelson, who's been a champion of this stuff, he said, I thought our chances were zero of keeping this thing open. And he said, what's. You know, and and, he said he told this conference of attendees as 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, you know, thinking the the three remaining of their six that they were going to turn off. They're putting back on and I think we're going to see new ground broken. And Japan came out just in the last week and said they're going to build more nuclear power and nuclear power plants. Now think about that. That's awesome. That's unbelievable. They had Fukushima, the Germans shut off their nuclear because of Fukushima. But guys, the Japanese are saying we're building more. OK guys, Fukushima didn't happen by accident. There was a like an incredible tsunami which was triggered by 100 earthquake. You're 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 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. OK, so Gorbachev, the last ruler of the USSR, passed away this week. Sacks for thought. 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 man we can do business with. Gorbachev had come to power in 1985. He had initiated reforms of the Soviet system. He was a communist, to be sure, but he introduced political reforms called Glasnost. And economic reforms called Perestroika and Reagan sees the opportunity to go meet with him. And they signed arms control treaty after arms control treaty and ended the threat of mutually assured destruction that the world had been living with since the beginning of the Cold War. You got to remember that, you know, the Cold War began shortly after World War Two, and we had this doctrine of mutually assured destruction or mad, and the whole world is living under the shadow of nuclear annihilation. This was showed repeatedly when I was a kid. There was a TV movie called the day after, the day after. It was. It was really scary. Yeah, America. Like we're all going to die. We had did you ever have nuclear bomb drills? We had to get under your desk. Yeah. I mean, so, yeah. So if you're like our age, you remember this that that movie, by the way, that that was a TV event movie. That was one of the most widely watched movies, but there were others. You know, Jim Cameron used this concept and in the Terminator movies, you know, it was something that people were really afraid of. And Reagan seized the opportunity. He thought, fundamentally that nuclear deterrence was a moral that yet better to have deterrence than a nuclear war, but that he, if he could, he sees the opportunity. To negotiate the end of the Cold War. And by the way, there were hardliners in his administration who did not want him to negotiate with Gorbachev, but they ended up doing a series of meetings. It culminated in 1986 at the Reykjavik Summit, and they signed deals to remove the, you know, these, these INFJ system deals now. And that ended the Cold War. And then basically what happened is in 1989, the Berlin Wall came down. Gorbachev allowed the western the Warsaw Pact countries to leave, and then in 1991 the Soviet Union collapsed. So, you know, he gets a lot of credit for being willing to reform that system. Now the sad thing is, if we were Fast forward 30 years later, where are we today? We're back in a new Cold War with Russia. I mean that we've been spending a good part of this year talking about the threat of a nuclear use. And, you know, this was a problem that we thought was solved 30 years ago. And now we're back with it today and you've gotta ask, have the successors of you know, Reagan and and and George Herbert Walker, Bush, the people who inherited our foreign policy over the last 30 years, have they done as good a job as Reagan did? Reagan ended the Cold War. We are back in a new Cold War. Why? What is the reason for this? There's been a A a series of stupid policies that now have put. The risk of nuclear war back on the table. My interest in Gorbachev is slightly different. He is an incredibly important character. The second-half of the 20th century, undeniable, you know, won the Nobel Prize. As you said. David kind of ended the Cold War. But the most important thing in my opinion was the precursor to prayer, ostrica and why he did it. And as you said like, you know, this is a fairly ardent communist, although he had really interesting views like he ran a very kind of like open kind of politburo where folks could debate and he, you know, promoted a lot of young people from within all of these interesting things. But. The most important thing, and he's written about this a lot, is the reason that he embarked on perestroika was because USSR at the time had an incredibly poor work ethic. Terrible productivity and horrible quality goods. And I think that there is 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's happening where we live right now, and if you look at then what happened afterwards, it became the aristocracy that basically ruled the USSR before. And then fighting against all these folks that wanted reforms and that created this schism, which then perverted capitalism for Nino, 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 and democracy, which is be careful. If you want more government, you might get more government guys. The Soviet Union, their economy used to run on what they called 5 year plans. It was incredibly centralized. It was all run by the government and you know, this was Communism and the 20th century, the second-half especially was a giant battle of systems, not just of countries, not just the Western bloc, you know, led by the US. The free world versus the Soviet Union and the Warsaw Pact was also a battle of philosophies and systems. It was the philosophy of state control versus freedom and. 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 socialist. 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 in, figure to touch the stove. They got to touch the stove themselves and get burned. We are about to go do that in California. Can you imagine if like people who want to be socialist 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, that's got a large driver of Gorbachev basically negotiating these peace settlements with, you know, with Reagan and this nuclear. You know, demilitarization was in part because he knew he couldn't fight right? It was this realization. Centralized system collapsing. Yeah. They cannot keep up. Reagan began an arms build up and there was an arms race and they were losing. They were losing. They were losing. This is, and This is why, like people should not misunderstand what Gorbachev was. He was not necessarily some democratic freedom fighter. He was a person who was observing the on the ground conditions of a socialist system decay, their ability to compete. And so he had to capitulate before it was forced upon him. Meanwhile, This is why I don't think he deserves much. Credit as 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 he that's right, but his. But but I think to his credit, when the things start to collapse, he didn't use violence and repression to try and hold it together. So, you know, he was a, he was a reformer. He was a liberalized rightest maybe, and a pragmatist 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 affect the 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 pod. The great thing about the IRA and what Chuck Schumer did is actually we'll 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 our relations years ago. Right. But I didn't cancel that. OK, well, listen. No, it's true. If you're willing to use natural gas and fracking. America is is one of the richest energy countries in the world. We produce a lot of oil too. Yeah. I mean listen, it will change everything if we can really go all in on all of the categories. Nuclear, it's just, it's just you and the and if you, if you, 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. I agree with that 100%. And the reason we want to stop it is because we have a couple of examples of, you know, extreme wealth. And I think that's something we have to think about is like, are the extreme, is the extreme wealth created for a certain class enough to stop the the prosperity train that we actually have in America? Listen, Jason, the 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 a day in their lives. Work they wouldn't, yeah. The great thing is we have a running AB 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 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 pointed at each other again. And you know what? Russia's a much poorer country. In the US we're actually 15 times richer than them during the Cold War. At their peak, we were only three times richer than them. But we're 15 times richer. But they still got over 6000 nukes. Why did we get rid of all those arms control treaties? Why have we basically alienated them? We talked. We said it before, like you're dealing with a pragmatist and Putin's KGB agent. Slightly. You feel like Putin isn't someone we can deal with now, but he was someone we could have dealt with ten 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. I think the only way he's actually gonna be, really the only way we'll be able to deal with him is if he doesn't have the oil market he has. Like, he just has too much power from that oil. And over time, that's the solution. We have to be energy independent. You know, I think Europe is learned that it was a communist. He was an heir to Stalin. Yet Reagan could still do business with him & an arms control treaty so that we could end the risk of mutually assured destruction. We have to believe you don't have to believe that Putin is a good guy in order for us to avoid getting back into a Cold War, which is the situation we find ourselves in now. How does it benefit us to have Russian nukes once again pointed at our heads? Yeah, I mean, and the reason why, 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, OK, 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 2 to tango, but hey, this has been episode 94. It does. It does take two to tango. But you have to ask, has the US foreign policy over the last 30 years that's gotten us in a new Cold War with Russia? Has that been a successful part foreign policy? They have undermined all the good work that Ronald Reagan and Gorbachev did together to end the Cold War. We are back in a new Cold War and you need to find Reagan. Just need to find a new. Don't blame. Putin has some blame, but so does the US State Department. So does the US State Department. And Europe. Europe has a big part of the blame too, here. Because he's their neighbor. Yeah, for the Sultan of science, the Rain Man and Reagan library chairman. Are you the chairman of the Reagan Library? Let me ask you this. When you were a kid, you have a Reagan poster in your room. Have you ever owned a Reagan poster? I'm sure I've definitely owned a picture of of Reagan. And look, I'm a Ronald Reagan. Listen, Jason Roy, 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 of the 1970s. And again, he he avoided getting us into any of these major wars. Tell me the politician who you could have lived with, anybody who's the politician who you Revere, who has a track record like that? Umm. 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 it was a good, good president, especially on #2 behind Reagan. And remember, he benefited from the economy that Reagan, whatever reason you would agree with me, Clinton is right behind Reagan, Reagan and Clinton in since like 1950, something easily topped 2. Yeah, easily, easily. An hour is very good. Listen, I mean, but head and shoulders I think, like for practically what they dealt with at their point of time. Amazing. Alright, listen, sacks, I know you love Reagan and Reagan. I think that you should put you should be 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. Alright. Love you, sexy poo. I love you all. Next time. Bye. Love you too. Happy birthday to you. Thanks, bro. Let your winners ride. Rain Man David Sasha. We open sources to the fans and they've just gone crazy with it. I'm going. Besties? My dog taking notice your driveway. Ohh man. We should all just get a room and just have one big huge order because they're always useless. It's like this, like sexual tension that they just need to release them out. Your beat beat your feet. We need to get merchants.