Learn. Share. Evolve…

0:00:02 AI is happening, and AI is only happening in two places.
0:00:05 Like, it’s only U.S. versus China, and there’s a whole competition thing there.
0:00:07 But, like, the U.S. is, like, very powerful.
0:00:11 If you disaggregate sectors of the economy over the last 25 years,
0:00:15 what you find is basically everything that technology touches basically collapses in price.
0:00:19 If the country is growing faster, it’s going to be a fundamentally happier place
0:00:22 because people, whichever side of the political spectrum you’re on,
0:00:23 there’s going to be a sense of optimism.
0:00:25 There’s going to be a sense of opportunity.
0:00:27 There’s going to be the sense that your kids are going to live better lives than you do.
0:00:34 Today on the A16Z podcast, we’re sharing an episode from Joe Lonsdale’s American Optimist,
0:00:37 recorded live at the first Ronald Reagan Economic Forum.
0:00:42 Joe sits down with A16Z co-founder Mark Andreessen to explore one of the biggest questions of our time.
0:00:45 Can the rise of AI spark a new American industrial revival,
0:00:50 and what would it take to make sure the entire country, including rural America, shares in the growth?
0:00:55 They cover the history of U.S. manufacturing, the debate over tariffs and trade,
0:00:59 and how AI and robotics might create the jobs and economic momentum of the future.
0:01:03 They also dig into immigration, regulatory bottlenecks,
0:01:06 and what smart policy should look like in an AI-driven world.
0:01:07 Let’s get into it.
0:01:13 This information is for educational purposes only and is not a recommendation to buy,
0:01:16 hold, or sell any investment or financial product.
0:01:20 This podcast has been produced by a third party and may include paid promotional advertisements,
0:01:24 other company references, and individuals unaffiliated with A16Z.
0:01:29 Such advertisements, companies, and individuals are not endorsed by AH Capital Management LLC,
0:01:31 A16Z, or any of its affiliates.
0:01:34 Information is from sources deemed reliable on the date of publication,
0:01:37 but A16Z does not guarantee its accuracy.
0:01:43 Mark, everyone, welcome to our first annual Reagan Economic Forum.
0:01:44 It’s an honor to have you guys here.
0:01:48 We talk a lot here, of course, about Reagan’s economic pillars and policies,
0:01:52 which include deregulation and lower taxes and lower spending,
0:01:53 all of which are very relevant today.
0:01:57 But Mark, I want to start off asking you about someone I know you’ve been reading about
0:01:59 and President Trump’s been reading about from 100 years before,
0:02:00 which is William McKinley.
0:02:04 And William McKinley, of course, was a staunch protectionist at first.
0:02:07 Is this historical example of how to revitalize American industry relevant today?
0:02:10 Is it relevant to everything we’re doing in AI and energy?
0:02:11 Like, how do you think about this?
0:02:14 Yeah, so I’ve been doing my best to kind of spin up in the history of this.
0:02:16 And so there was something in the 19th century,
0:02:18 actually originally created by Alexander Hamilton,
0:02:20 when he was Treasury Secretary, called the American system.
0:02:23 And, you know, this was like 80 years before McKinley, 90 years before McKinley.
0:02:26 What they were dealing with was the British Empire, right?
0:02:28 The UK was the preeminent industrial power.
0:02:31 They were the first, like, giant industrial power on planet Earth
0:02:35 and had built this very commanding economic, technological military position.
0:02:38 And, of course, America at the time of the Revolution was mostly farmland.
0:02:40 And then there was this raging debate between Hamilton and Jefferson
0:02:44 as to whether you’d want America to be an industrial, kind of urban, financialized power,
0:02:45 which is what Hamilton wanted,
0:02:48 or of kind of a rural farming aristocratic power,
0:02:49 which is what Jefferson wanted.
0:02:50 And Hamilton won that debate.
0:02:52 And so that led to what was called the American system.
0:02:57 The American system led to the creation of the United States as an industrial power.
0:02:58 That developed over the course of the 19th century.
0:03:01 But it really took off at the tail end of the 19th century
0:03:04 in what was called the Second Industrial Revolution.
0:03:08 And so between, call it, 1870, 1880, and, like, 1930,
0:03:12 basically everything we view today as the modern world was basically invented then.
0:03:15 And you could almost look around the room here today,
0:03:18 and you could say basically every piece of physical infrastructure,
0:03:20 everything around us, literally everything.
0:03:25 The airplane manufacturing techniques to be able to make modern glassware at scale,
0:03:29 air conditioning, television, radio, the automobiles we drove to get here.
0:03:31 It all was the result of the Second Industrial Revolution.
0:03:34 And then the McKinley presidency was right in the middle of that period.
0:03:36 It’s really when the whole thing catalyzed.
0:03:39 And so it was really the point at which America became the world’s industrial superpower.
0:03:42 And then, of course, that led to America being able to become a huge player
0:03:44 in both World War I and World War II,
0:03:47 ultimately winning World War II and becoming the arsenal of democracy.
0:03:49 It all kind of floated out of that period.
0:03:52 And so the American system is something that people really don’t like to talk about these days
0:03:54 because it was heavily protectionist.
0:03:58 And the whole theory of it was you don’t industrialize just with a single technology
0:03:59 or a single company.
0:04:02 You industrialize by having an entire ecosystem, right?
0:04:04 You industrialize by having not just three car companies,
0:04:08 but by having all the thousands of part suppliers that make all the parts for the cars.
0:04:10 And so the Brits had done this.
0:04:12 They had run a very heavily protectionist program
0:04:15 to be able to boot up the first industrial revolution in the UK.
0:04:17 They then advocated for free trade
0:04:18 when exports became more important.
0:04:21 McKinley was the inheritor of the American system,
0:04:24 and so he was heavily protectionist to build up the second industrial revolution.
0:04:27 And then he actually switched to become more of an advocate for free trade
0:04:30 because as American exporters were becoming more successful,
0:04:31 they needed exports, they needed foreign markets.
0:04:34 And then, by the way, in the 20th century,
0:04:36 basically every industrial revolution in every other country
0:04:38 that has worked in the last hundred years
0:04:39 basically follows that model as well.
0:04:41 So it’s the same thing Germany did.
0:04:42 It’s the same thing Japan did.
0:04:43 It’s the same thing Korea did.
0:04:45 It’s the same thing China is doing right now.
0:04:48 China’s basically been running the American system playbook in China.
0:04:51 And so, and then this goes to tariff policy.
0:04:53 And I’m not here to make an argument like it’s like in favor of tariffs,
0:04:55 but more of a historical observation
0:04:57 that there has been this phenomenon over time
0:05:00 that if you want to have the kind of clustering effect
0:05:02 that leads to industrial preeminence,
0:05:05 it is not unusual to have a combination of tools
0:05:07 and kind of tools and methods used to do that.
0:05:09 It has been historically characteristic
0:05:10 that tariffs would be a part of that.
0:05:12 But it’s also historically characteristic
0:05:13 that there becomes this point
0:05:15 when you also therefore want to go for exports
0:05:16 and you want to go for free trade.
0:05:17 And McKinley specifically,
0:05:20 he ran for office very much on the idea
0:05:21 of having a high and permanent tariff.
0:05:22 Once he was in office,
0:05:26 he switched more to a model of what he called reciprocity, right?
0:05:27 And basically it was,
0:05:28 we start out by tariffing,
0:05:30 but the goal actually is to get everybody to lower their tariffs.
0:05:33 The goal is to get a world of much more free trade
0:05:34 and then therefore these American exporters
0:05:36 were able to succeed globally.
0:05:38 And of course, he was able to use American tariffs
0:05:40 as a lever to get other countries to drop their tariffs.
0:05:41 And so in that sense,
0:05:43 what we’re going through right now in the U.S.
0:05:45 is sort of very characteristic of that.
0:05:47 And what makes maybe the whole thing kind of more poignant
0:05:50 is there is this kind of fundamental underlying question,
0:05:51 which is do we want the U.S.
0:05:53 to be an industrial superpower or not, right?
0:05:54 And in the 19th century,
0:05:56 they were like completely clear that they wanted that.
0:05:56 And in our time,
0:05:58 I think we’re still ambiguous about it.
0:06:00 So it’s interesting though,
0:06:02 because, and you’ve said this yourself in other contexts,
0:06:04 we had this manufacturing wave.
0:06:05 And then in starting the 1960s,
0:06:08 services really drove a lot of our growth the last 60 years,
0:06:09 which obviously was not as tied to that.
0:06:10 So the elite,
0:06:11 maybe we’re not thinking about these issues as much.
0:06:13 And I guess the question is today,
0:06:15 are we shifting into something else?
0:06:17 Is it an AI-driven economy?
0:06:17 What is it?
0:06:19 And it seems like Trump’s camp’s a little bit split.
0:06:21 You have really two visions.
0:06:21 One vision,
0:06:24 you’d say maybe more like the Bannon side
0:06:26 is more focused on reviving traditional manufacturing
0:06:27 through tariffs,
0:06:29 through industrial incentives.
0:06:30 Then you have the other side
0:06:31 that’s more about tech acceleration
0:06:32 via AI,
0:06:33 via chips,
0:06:33 via energy.
0:06:35 So how do these things play into,
0:06:35 I mean,
0:06:37 are we going to be able to copy the past
0:06:38 or is it a new policy here?
0:06:38 Yes.
0:06:39 I mean,
0:06:40 this is sort of the central question,
0:06:40 I think.
0:06:42 So my read of the trajectory basically
0:06:44 is call it between 1870 and 1920.
0:06:46 The U.S. economy was heavily based on industrialization,
0:06:48 all the stuff I just talked about.
0:06:48 By the way,
0:06:51 very high immigration environment at the time,
0:06:52 very rapid rate of immigration
0:06:53 and then actually very high tariffs.
0:06:54 And by the way,
0:06:56 an annual growth rate of something like 3x,
0:06:58 the current growth rate of the U.S.,
0:06:59 with a much smaller population
0:07:00 and with fewer tools to work with.
0:07:03 Then there was sort of the 1920 to 1970 period
0:07:05 where the growth rate was maybe something like 2x,
0:07:06 the rate that we have now.
0:07:08 And that was the space race
0:07:09 and rockets and electronics
0:07:10 and the beginning of the computer industry
0:07:12 and it went quite well
0:07:13 from an economic growth standpoint.
0:07:14 And then around the time I was born,
0:07:15 around 1971,
0:07:17 basically the U.S. economy
0:07:19 permanently downshifted its growth rate
0:07:21 and both in terms of productivity growth,
0:07:22 which of course measures
0:07:24 technological transformation in the economy
0:07:25 as well as economic growth.
0:07:27 And so we went from like super high growth
0:07:28 to like high growth to low growth.
0:07:31 That low growth coincided with this shift, right?
0:07:33 With all the shifts that happened in the 1970s,
0:07:35 many of which Reagan was a reaction to,
0:07:36 but many of those shifts happened
0:07:37 and many of those shifts have continued.
0:07:38 As you said,
0:07:39 less industrial enthusiasm,
0:07:41 more what they call services.
0:07:42 And by the way,
0:07:43 the good news of that transition
0:07:44 is the transition to knowledge work
0:07:45 has worked really well.
0:07:47 And we live and work in places
0:07:48 like Silicon Valley and Austin
0:07:50 and others that have done phenomenally well
0:07:51 because you’ve got all these tech companies
0:07:53 that are global exporters to technology
0:07:54 and the AI revolution is happening in the U.S.
0:07:56 You know, and it’s absolutely tremendous.
0:07:57 But, you know,
0:07:58 we transformed the American economy
0:07:59 to basically have knowledge work
0:08:00 on the high end
0:08:01 and then financialization,
0:08:03 banking and currency
0:08:04 and being the safe bond asset
0:08:05 on the other hand.
0:08:06 And then we basically chose
0:08:08 to de-industrialize, right?
0:08:09 And we chose to de-industrialize
0:08:11 through a set of explicit policy choices,
0:08:12 not least of which is
0:08:13 we made a lot of industrial activity
0:08:14 illegal over time.
0:08:15 And I would argue that formula,
0:08:16 first of all,
0:08:17 it just hasn’t worked that well
0:08:18 in terms of growth, right?
0:08:19 If it doesn’t pay off
0:08:20 in terms of productivity growth
0:08:20 and economic growth,
0:08:22 like how is it actually going?
0:08:22 And of course,
0:08:23 the problem,
0:08:24 the irony of this is
0:08:25 if you don’t like populism,
0:08:27 the way that you get populism
0:08:28 is slow growth, right?
0:08:29 Because slow growth
0:08:30 puts everybody in the mind
0:08:31 of zero-sum, right?
0:08:32 Everything becomes a zero-sum
0:08:33 kind of fight for resources
0:08:34 because people don’t think
0:08:35 that there’s a lot of opportunity
0:08:35 in the future.
0:08:37 And so the formula
0:08:39 that kind of all the smart people did
0:08:40 actually created the preconditions
0:08:41 for the sort of research
0:08:43 of populism on both left and the right.
0:08:44 And then the other kind of
0:08:45 really critical thing
0:08:46 happening right now
0:08:47 that you see just happening
0:08:47 kind of everywhere
0:08:48 in our politics and society
0:08:50 is this just giant divide
0:08:50 between the cities
0:08:51 and the countryside.
0:08:53 And I’m sort of a weird
0:08:54 example of this myself.
0:08:55 I grew up in rural Wisconsin
0:08:56 in what was sort of
0:08:57 originally farming
0:08:58 and then sort of light industry
0:08:59 kind of world.
0:09:00 And then when I graduated college,
0:09:01 I moved to California.
0:09:02 I did a jump to
0:09:03 kind of the polar opposite
0:09:04 kind of culture
0:09:05 and kind of world.
0:09:05 And of course,
0:09:06 when I was in Wisconsin,
0:09:07 I was like,
0:09:07 wow, those smart people
0:09:08 on the coast
0:09:08 must be so much better
0:09:10 and smarter than we are.
0:09:10 And then I got to the coast
0:09:11 and I was like,
0:09:12 wow, these people on the coast
0:09:12 really hate everybody
0:09:13 where I grew up.
0:09:15 This is interesting.
0:09:16 I knew they didn’t like us.
0:09:17 I didn’t realize they despised us
0:09:19 quite to this degree.
0:09:20 And so now we have this
0:09:22 just like raging cultural,
0:09:23 social, economic disconnect
0:09:24 between the cities
0:09:24 and the countryside,
0:09:26 which I think is quite dangerous.
0:09:27 Let’s be controversial
0:09:28 and dig into this
0:09:29 a little bit more in cities.
0:09:30 So I think a lot of us
0:09:31 have noticed
0:09:32 that our cities
0:09:33 are deeply dysfunctional.
0:09:34 they’re broken
0:09:35 in our society, right?
0:09:36 I think we have a candidate
0:09:37 who’s like a socialist Islamist
0:09:38 who’s in danger
0:09:39 of taking over New York
0:09:40 very soon right now.
0:09:41 And we have all sorts of problems.
0:09:42 People can’t afford
0:09:43 to have kids in cities
0:09:44 the way they’re set up.
0:09:45 I think there’s this
0:09:46 cost disease for everything.
0:09:47 What went wrong?
0:09:48 What’s going on
0:09:48 with these cities?
0:09:49 And what’s an optimistic
0:09:50 take on it, Mark?
0:09:51 How can we fix this?
0:09:52 Yeah, so the guy in New York
0:09:53 is interesting
0:09:54 and he’s kind of running
0:09:54 slightly behind Cuomo
0:09:55 for New York mayor,
0:09:56 but he’s literally running
0:09:56 a platform,
0:09:57 among other things,
0:09:58 of having city-owned
0:10:00 grocery stores, right?
0:10:01 And so the joke is
0:10:02 he’s reinventing bread lines
0:10:03 for the 21st century.
0:10:04 That’s impressive.
0:10:05 Really tremendous platform.
0:10:07 Seattle is another case study
0:10:07 of this.
0:10:08 Seattle, to give you a sense
0:10:09 how crazy things are,
0:10:10 the district in Seattle,
0:10:11 the city council district
0:10:12 where the most Microsoft
0:10:13 and Amazon executives live,
0:10:15 I elected a city council woman
0:10:16 who ran a platform
0:10:16 of nationalizing
0:10:17 Microsoft and Amazon.
0:10:19 Right, and then, you know,
0:10:20 in the Bay Area,
0:10:21 I live in ground zero
0:10:22 of dysfunction and collapse
0:10:23 and I’ve got thousands
0:10:24 of stories from the Bay Area.
0:10:25 Yeah, so I think there’s
0:10:26 like a very fundamental
0:10:27 political economy thing
0:10:29 happening which falls out
0:10:29 of this sort of
0:10:30 economic transformation
0:10:31 that’s happened
0:10:31 and this policy transformation
0:10:32 that’s happened
0:10:33 and so there’s actually
0:10:34 a French writer,
0:10:35 a geographer,
0:10:35 who has, I think,
0:10:37 the best analysis on this
0:10:38 and has written a great book
0:10:38 on it called
0:10:39 Twilight of the Elites
0:10:39 and what he basically
0:10:40 observes is if you look
0:10:41 at all the Western countries
0:10:42 through this process
0:10:44 of sort of deindustrialization
0:10:45 and financialization
0:10:46 and sort of technology
0:10:46 and knowledge work
0:10:47 becoming preeminent
0:10:48 at the high end
0:10:48 of the economy,
0:10:49 you sort of have
0:10:50 this pattern where
0:10:51 basically like
0:10:53 in an agricultural economy
0:10:54 or in a manufacturing economy,
0:10:55 you kind of have to spread
0:10:55 everything out
0:10:56 throughout the country
0:10:57 because like natural resources
0:10:58 really matter
0:10:59 and energy really matters
0:11:00 and physical infrastructure
0:11:01 matters and access
0:11:03 to trains and all these things,
0:11:03 you know, really
0:11:04 in rivers and water
0:11:05 and so forth really matters
0:11:06 but if you’re going
0:11:07 to replant the sort of
0:11:08 commanding heights
0:11:08 of your economy
0:11:09 on knowledge work,
0:11:09 then what you’re going to do
0:11:10 is you’re going to slam
0:11:11 basically all economic growth
0:11:12 into the cities, right,
0:11:13 which is what Silicon Valley
0:11:14 has done, right?
0:11:14 So you’re going to
0:11:15 all the software developers
0:11:16 in one place.
0:11:17 The good news is
0:11:17 they’re going to eat
0:11:18 at high-end restaurants
0:11:19 and they’re going to
0:11:19 employ a lot of nannies
0:11:20 but fundamentally
0:11:21 they’re going to be
0:11:21 sitting in conference rooms
0:11:23 designing software together
0:11:24 and you want that
0:11:24 to happen in a single
0:11:25 concentrated place
0:11:26 and so what happens
0:11:27 is basically
0:11:27 the cities become
0:11:28 a magnet for basically
0:11:29 two kinds of people.
0:11:30 One is sort of
0:11:31 the upper class
0:11:32 which is to say
0:11:33 kind of the highly educated
0:11:34 elite in the knowledge
0:11:34 of professions
0:11:35 who make enough money
0:11:36 where they can afford
0:11:37 to buy, you know,
0:11:38 three million dollar houses
0:11:39 so you’ve got basically
0:11:40 like super expensive homes
0:11:41 and then you’ve got
0:11:42 so-called public housing, right?
0:11:43 Council estates in the UK
0:11:44 or section 8, 8H
0:11:45 or whatever it is
0:11:45 housing here
0:11:46 where you’ve got
0:11:47 basically public housing
0:11:48 and then the public housing
0:11:49 is basically
0:11:50 it’s people who are
0:11:50 very low-paid
0:11:51 kind of on the low end
0:11:52 of the service economy
0:11:53 and then that’s the city
0:11:54 and then who’s squeezed
0:11:55 out of the city
0:11:55 is basically right
0:11:56 the entire middle class
0:11:57 is squeezed out
0:11:58 and just to give you
0:11:58 an example of this
0:11:59 in the Bay Area
0:12:00 if you’re a cop
0:12:00 or a firefighter
0:12:01 in the Bay Area
0:12:02 and you work in Palo Alto
0:12:03 you commute three hours
0:12:04 both ways
0:12:05 just to be able to like
0:12:06 have a house
0:12:07 and afford a family, right?
0:12:08 And then of course
0:12:08 you look what’s happening
0:12:09 in the cities
0:12:09 and like there’s like
0:12:10 lots of dogs
0:12:11 there’s very few kids, right?
0:12:11 And it’s like
0:12:12 what on earth is that about?
0:12:14 Well, you can’t buy a house
0:12:15 you can’t have a family
0:12:16 you may not even own a car
0:12:17 like how are you
0:12:17 going to get kids anywhere?
0:12:19 But what happens is
0:12:20 from a political standpoint
0:12:20 is the cities
0:12:21 that are run
0:12:22 in their local democracies
0:12:24 it’s these super high-end
0:12:25 kind of very progressive elites
0:12:26 and then it’s sort of
0:12:27 the clientele underclass
0:12:28 right of, you know,
0:12:28 in the US
0:12:29 it’s Hispanic immigrants
0:12:30 or African Americans
0:12:31 in Europe
0:12:32 it’s their other kind
0:12:32 of clientele underclass
0:12:33 that they’ve developed
0:12:34 in places like Paris
0:12:35 and so you’ve got
0:12:36 this high plus
0:12:37 you’ve got this kind of
0:12:37 old political
0:12:38 kind of structure
0:12:39 of sort of top plus bottom
0:12:40 kind of configuration
0:12:41 which you’ve done
0:12:42 is you’ve squeezed the middle
0:12:43 and you’ve ejected the middle
0:12:43 out of the cities
0:12:44 into the countryside
0:12:46 but you’ve de-industrialized
0:12:47 and so there’s no
0:12:48 new economic activity
0:12:49 happening in the countryside
0:12:50 for all the middle class
0:12:50 people to do.
0:12:51 This so far
0:12:52 is not an optimistic panel, Mark.
0:12:53 Sorry.
0:12:54 Sorry.
0:12:56 Let me try to make it optimistic.
0:12:56 Sorry.
0:12:57 Let me try to make it optimistic.
0:12:58 Okay.
0:12:59 Let me try to make it optimistic.
0:13:00 These are choices.
0:13:01 These are choices.
0:13:02 These are policy choices.
0:13:03 Sometimes the way
0:13:04 this stuff gets painted
0:13:05 is that these are just
0:13:06 like impersonal economic forces
0:13:07 or technology forces
0:13:07 and of course
0:13:08 you know I get this a lot
0:13:09 it’s like you idiot
0:13:10 don’t you understand
0:13:10 that like you know
0:13:11 manufacturing is old fashioned
0:13:13 we have all this new stuff
0:13:13 we shouldn’t need you know.
0:13:14 No these are choices
0:13:16 like there were specific choices made.
0:13:17 So the classic choice
0:13:18 the classic choice
0:13:18 that was made
0:13:19 since I wrote the Reagan Library
0:13:20 I’ll beat up on Nixon.
0:13:21 So Richard Nixon
0:13:22 the year I was born
0:13:22 1971
0:13:23 he proposed something
0:13:24 called Project Independence.
0:13:25 He actually
0:13:26 visionary visionary president
0:13:28 he saw the energy crisis coming
0:13:28 and he said
0:13:29 it’s a national imperative
0:13:30 to build a thousand
0:13:31 new nuclear power plants
0:13:32 civilian nuclear power plants
0:13:33 in the U.S.
0:13:33 by the year 2000
0:13:34 cut the entire U.S.
0:13:35 electric grid over to nuclear.
0:13:36 by the way
0:13:37 would have gotten us
0:13:38 to electric cars
0:13:39 probably 30-40 years faster
0:13:40 and would have completely
0:13:41 separated us
0:13:42 from strategic involvement
0:13:42 in the Middle East
0:13:43 for energy.
0:13:44 So that was the good news.
0:13:45 The bad news is
0:13:46 he created the EPA
0:13:47 and the Nuclear Regulatory Commission
0:13:48 which then prevented
0:13:48 Project Independence
0:13:49 from happening
0:13:50 and of course
0:13:51 no new nuclear power plants
0:13:51 got built.
0:13:53 But that was a policy choice
0:13:54 right
0:13:54 and I’m sure
0:13:55 that was not the result
0:13:55 that he intended
0:13:57 but that was a policy choice.
0:13:58 And by the way
0:13:58 a lot of this is happening
0:13:59 right now in Washington
0:14:00 like there is an opportunity
0:14:01 to look at everything
0:14:02 from nuclear power
0:14:03 minerals
0:14:03 natural resources
0:14:04 I was on a call
0:14:04 this morning
0:14:05 on natural resources
0:14:06 with very promising
0:14:07 progress being made
0:14:08 you know rare earth metals
0:14:09 there’s construction
0:14:10 we have a project
0:14:11 to build a new city
0:14:11 in California
0:14:12 we’ve bought
0:14:13 four times the acreage
0:14:14 of Manhattan
0:14:15 in Solano County
0:14:16 we’ve had the opportunity
0:14:16 to build like
0:14:17 entirely new cities
0:14:18 in this country
0:14:19 there’s any number
0:14:20 of these policy decisions
0:14:21 that we could make
0:14:21 that would cause
0:14:22 revitalization
0:14:22 so we’re going to fix
0:14:23 better policies
0:14:24 there’s something else
0:14:24 going on though
0:14:25 which I think you and I
0:14:26 are both very bullish on
0:14:27 which is this AI wave
0:14:28 and AI services
0:14:28 right
0:14:29 and so I think
0:14:30 one thing that’s very
0:14:31 interesting right now
0:14:32 is obviously we all know
0:14:33 there’s major cost disease
0:14:33 in our society
0:14:34 healthcare is becoming
0:14:35 more and more unaffordable
0:14:36 I think people are talking
0:14:37 about our 36 trillion dollar debt
0:14:39 it’s actually 150 trillion more
0:14:40 if you include our healthcare
0:14:40 promises
0:14:41 much bigger problem
0:14:42 obviously education
0:14:43 housing
0:14:43 all these things
0:14:45 are becoming less affordable
0:14:46 but you and I have both seen
0:14:47 that a lot of these new technologies
0:14:48 are going to turn
0:14:48 some of these services
0:14:50 into much more affordable products
0:14:50 and I think we’re making
0:14:51 big bets on that
0:14:52 tell us about this
0:14:53 yeah so first of all
0:14:54 just a moment on AI
0:14:55 so you asked a question earlier
0:14:56 which is there’s a traditionalist view
0:14:57 of like we need to go get the jobs
0:14:58 that used to exist
0:14:59 we need to somehow bring them back
0:15:00 and here you get into this argument
0:15:02 of well you’ve got Chinese laborers
0:15:03 working for a dollar an hour
0:15:03 or whatever
0:15:05 it was just not cost effective
0:15:05 to bring those jobs back
0:15:07 what we have though
0:15:08 is we’re at this very specific
0:15:09 and important and fundamental
0:15:10 and I think profound
0:15:11 turning point in technology
0:15:12 which is the rise of AI
0:15:13 and I would say the good news
0:15:14 let’s make the panel optimistic
0:15:15 the good news is the US
0:15:17 is like by far the leader on AI
0:15:18 now by the way
0:15:19 we need to decide
0:15:20 whether we want to be the leader in AI
0:15:21 because there’s like a lot of forces
0:15:22 in the US
0:15:23 and in the US government
0:15:24 that are trying to prevent that
0:15:24 from happening
0:15:25 but
0:15:26 there’s over a thousand laws
0:15:26 at state level
0:15:28 we’ve been trying to fight and stop
0:15:29 that would screw this up
0:15:29 right so there’s a lot of people
0:15:30 who are against this
0:15:31 California state government
0:15:32 almost passed a law
0:15:33 outlaw AI in California
0:15:34 six months ago
0:15:35 which is an indication
0:15:36 how crazy California is
0:15:36 but yes
0:15:38 it’s like everything else
0:15:39 we can have it if we want it
0:15:40 AI is happening
0:15:41 and AI is only happening
0:15:42 in two places
0:15:43 like it’s only US versus China
0:15:45 and there’s a whole competition thing there
0:15:45 but like the US
0:15:46 is like very powerful
0:15:47 on this
0:15:47 and then by the way
0:15:48 the US is benefiting a lot
0:15:49 because Europe
0:15:50 has basically made AI illegal
0:15:51 like they’re regulating themselves
0:15:52 to death
0:15:53 and so the smart AI people
0:15:54 in Europe
0:15:55 are moving to the US
0:15:55 and so like
0:15:56 the US really is ground zero
0:15:57 for AI
0:15:58 today
0:15:59 AI is software
0:16:00 right
0:16:01 and so when you use AI
0:16:02 you use chat GPT
0:16:03 it’s an app on your phone
0:16:03 right
0:16:04 there’s no manufacturing
0:16:05 kind of component
0:16:06 people are building
0:16:06 giant data centers
0:16:08 but it’s not a huge generator
0:16:09 of like middle class jobs
0:16:10 but there’s another turn
0:16:11 on AI that’s coming
0:16:12 which is the turn
0:16:13 to embodied physical AI
0:16:14 which is robotics
0:16:14 right
0:16:15 and this is a transition
0:16:16 that has already happened
0:16:17 it’s already actually happened
0:16:18 in drones
0:16:19 where drones went from
0:16:20 being human piloted
0:16:20 to actually being
0:16:21 autonomously piloted
0:16:22 they now fly themselves
0:16:23 it’s a transition
0:16:24 that’s happening
0:16:25 in cars right now
0:16:25 right
0:16:26 where cars went from
0:16:27 basically purely
0:16:27 physical products
0:16:28 to now basically
0:16:29 being rolling computers
0:16:30 that drive themselves
0:16:31 and if you haven’t
0:16:31 tried this yet
0:16:32 if you ever
0:16:33 have the misfortune
0:16:33 of finding yourself
0:16:34 in San Francisco
0:16:35 take a Waymo
0:16:36 it’s amazing to live
0:16:37 in a cyberpunk
0:16:38 future reality
0:16:38 where you’re in
0:16:39 literally a state-of-the-art
0:16:40 self-driving car
0:16:41 that’s literally out
0:16:42 of the Jetsons
0:16:42 driving past people
0:16:43 who are dying
0:16:43 of fentanyl overdoses
0:16:44 on the sidewalk
0:16:45 I recommend
0:16:46 having the experience
0:16:46 at least once
0:16:48 but the self-driving car
0:16:48 really does work
0:16:49 like it’s really happening
0:16:50 and then what’s going
0:16:51 to happen
0:16:52 you’ve all probably seen
0:16:52 you know Elon
0:16:53 has this Optimus robot
0:16:54 that he’s building
0:16:54 these humanoid robots
0:16:56 like the general purpose
0:16:56 robotics
0:16:58 thing is going to happen
0:16:59 and it’s going to happen
0:16:59 in the next decade
0:17:00 and it’s going to happen
0:17:01 at giant scale
0:17:01 and I think there’s
0:17:02 a plausible argument
0:17:03 which Elon also believes
0:17:04 that robotics
0:17:04 is going to be
0:17:05 the biggest industry
0:17:05 in the history
0:17:06 of the planet
0:17:07 it’s going to be gigantic
0:17:08 there’s going to be
0:17:08 billions
0:17:08 tens of billions
0:17:09 hundreds of billions
0:17:09 of robots
0:17:10 of all shapes
0:17:10 sizes
0:17:11 descriptions
0:17:11 running around
0:17:12 doing all kinds
0:17:12 of things
0:17:13 those robots
0:17:14 need to get designed
0:17:14 and built
0:17:15 right
0:17:16 and so my view is
0:17:17 we don’t try to get
0:17:18 the old manufacturing jobs
0:17:18 back
0:17:18 what we should do
0:17:19 is lean hard
0:17:20 into the manufacturing jobs
0:17:21 of the future
0:17:22 which is designing
0:17:23 and building
0:17:24 all of these new things
0:17:24 right
0:17:25 by the way
0:17:27 right
0:17:27 and robots
0:17:29 and we shouldn’t be
0:17:30 building manufacturing lines
0:17:30 that have people
0:17:31 sitting on a rubber mat
0:17:32 for 10 hours
0:17:33 screwing screws in by hand
0:17:34 but we should be building
0:17:34 what Elon calls
0:17:36 alien dreadnought factories
0:17:36 right
0:17:36 which is like
0:17:37 these super sophisticated
0:17:37 factories
0:17:38 with like tons of robotics
0:17:40 but you can imagine
0:17:41 thousands and thousands
0:17:42 of different categories
0:17:42 of industrial production
0:17:43 that have to happen
0:17:44 all across the U.S.
0:17:45 in order to make this happen
0:17:46 and would cause
0:17:47 just like enormous
0:17:47 economic growth
0:17:48 throughout the country
0:17:49 we get a huge payoff
0:17:50 from all the tech investment
0:17:51 that the coasts are making
0:17:52 but we generate
0:17:53 many tens or hundreds
0:17:54 of millions of jobs
0:17:55 in the countryside
0:17:56 and then the U.S.
0:17:57 would lead
0:17:58 it would be the third industrial
0:17:59 or fourth industrial revolution
0:17:59 we would lead
0:18:00 in the development
0:18:01 of all these new things
0:18:02 and then you get
0:18:02 to the national security
0:18:03 side of this
0:18:04 which is
0:18:05 if you don’t do this
0:18:06 you’re living in a world
0:18:07 of Chinese robots everywhere
0:18:08 and that has
0:18:09 very profound consequences
0:18:10 for let’s just say
0:18:11 yeah profound consequences
0:18:11 and it’s an important
0:18:12 policy point
0:18:13 and I want to dig
0:18:14 into this a little bit more
0:18:14 a lot of
0:18:15 I was just in an interview
0:18:16 up there
0:18:16 like aren’t we going to
0:18:17 destroy tens of millions
0:18:18 of jobs
0:18:18 isn’t AI scary
0:18:19 a lot of people
0:18:20 are very scared right now
0:18:20 with the disruption
0:18:21 I’m very excited
0:18:22 about the higher productivity
0:18:23 because I see it
0:18:24 being disinflationary
0:18:25 I see it creating more jobs
0:18:26 assuming we’re aligned
0:18:27 how do we explain this
0:18:27 to people
0:18:28 how do we explain
0:18:28 this is actually
0:18:29 a really good thing
0:18:29 for the country
0:18:30 because a lot of Luddites
0:18:31 are going to attack this
0:18:32 they are going to try
0:18:32 to stop it
0:18:33 yeah so the Luddites
0:18:34 are wrong
0:18:34 they’re wrong
0:18:35 in the sense of like
0:18:35 for the reason
0:18:36 they’ve always been wrong
0:18:37 which is the reality
0:18:38 is we have not
0:18:39 in the last 50 years
0:18:39 been in an era
0:18:41 of fast productivity growth
0:18:41 technological change
0:18:42 we’ve been in an area
0:18:43 of slow productivity change
0:18:44 slow economic growth
0:18:46 AI if it works the way
0:18:47 that actually people
0:18:48 either hope or fear
0:18:48 that it’s going to work
0:18:49 it’s going to cause
0:18:50 productivity growth
0:18:50 to shoot up
0:18:51 that will naturally
0:18:52 accelerate economic growth
0:18:53 but look if it just
0:18:54 stays as software
0:18:55 then the result of that
0:18:56 is it’s going to make
0:18:57 the cities much better off
0:18:57 right it’s going to make
0:18:58 San Francisco and LA
0:18:59 and New York much better off
0:19:00 and Austin much better off
0:19:01 but it’s still not
0:19:02 going to answer this question
0:19:03 of what happens
0:19:03 in the countryside
0:19:04 to answer the question
0:19:05 of what happens
0:19:05 in the countryside
0:19:06 you need to get
0:19:07 to the next thing
0:19:07 you need to make
0:19:09 AI hardware as well
0:19:09 as software
0:19:10 and you’re right back
0:19:11 to that same prescription
0:19:12 of basically re-industrializing
0:19:12 the country
0:19:13 and again
0:19:14 not re-industrializing
0:19:14 the country
0:19:15 on the stuff
0:19:16 that has already left
0:19:17 re-industrializing
0:19:17 the country
0:19:18 based on all the things
0:19:18 that have to be
0:19:19 invented and built
0:19:20 and it’s just like
0:19:21 we know
0:19:21 I’d be just like
0:19:22 incredibly highly confident
0:19:23 that there’s going to be
0:19:24 these giant industries
0:19:26 of computerized everything
0:19:26 AI powered
0:19:27 all kinds of hardware
0:19:28 of all kinds of
0:19:29 shape sizes to descriptions
0:19:29 you know
0:19:30 you’re funding a lot
0:19:30 of that kind of thing
0:19:31 I’m funding a lot
0:19:31 of that kind of thing
0:19:32 I mean look
0:19:33 the entire defense base
0:19:34 has to get rebuilt
0:19:35 around this day
0:19:35 we’re going to redo
0:19:36 the manufacturing
0:19:36 we’re going to build
0:19:37 roads and tunnels
0:19:38 and everything cheaper
0:19:39 it’s going to be exciting
0:19:39 yeah
0:19:40 and so this is the thing
0:19:41 to do
0:19:41 like to me
0:19:42 the path on this
0:19:42 is very clear
0:19:43 because we have to do this
0:19:44 because it’s necessary
0:19:44 from a national security
0:19:45 standpoint
0:19:46 we have to do it
0:19:46 because we need
0:19:47 the economic growth
0:19:47 we have to do it
0:19:48 because we need
0:19:48 an answer
0:19:49 for the entire population
0:19:50 of the country
0:19:50 not just the cities
0:19:51 yeah
0:19:52 and we have to do it
0:19:52 because if we don’t do it
0:19:53 China’s going to do it
0:19:54 and we don’t want to live
0:19:54 in that world
0:19:55 so I want to circle back
0:19:57 to another controversial topic
0:19:58 which over the last
0:19:58 several decades
0:19:59 you mentioned this
0:20:00 we’ve kind of pursued
0:20:01 deindustrialization
0:20:02 financialization
0:20:03 we’ve also pursued
0:20:04 mass immigration
0:20:05 and the view
0:20:06 from the tech world
0:20:07 has almost always been
0:20:08 we need more
0:20:08 of the smartest people
0:20:09 to come here
0:20:09 and build with us
0:20:11 a lot of my smartest friends
0:20:11 are immigrants
0:20:12 and they’ve built great things
0:20:14 but at the same time
0:20:15 some of this mass immigration
0:20:15 has really affected
0:20:16 the working class
0:20:17 in certain ways
0:20:18 that’s maybe not great
0:20:18 I know your views
0:20:19 have evolved on this topic
0:20:21 like what is the right
0:20:21 immigration policy
0:20:22 and how does it tie into
0:20:23 what you’re seeing
0:20:24 for the next few decades
0:20:25 yeah so separate it
0:20:26 you know the classic split
0:20:26 between so-called
0:20:27 high-skilled and low-skilled
0:20:28 immigration
0:20:29 so on the low-skilled
0:20:29 immigration side
0:20:30 it’s actually
0:20:31 a lot of the AI doomers
0:20:32 kind of have this split
0:20:33 personality
0:20:33 where they’re like
0:20:34 AI’s going to eliminate
0:20:34 all the jobs
0:20:35 and we need to import
0:20:36 another 100 million people
0:20:37 from the third world
0:20:38 as fast as possible
0:20:39 or we won’t have any
0:20:40 you know so there’s a bit
0:20:41 of a weird kind of
0:20:42 disconnect I think
0:20:43 in the logic on that
0:20:44 look the country
0:20:44 went through this before
0:20:45 as I said earlier
0:20:46 there was very high
0:20:47 immigration between
0:20:48 like 1870 and 1920
0:20:49 they closed the gates
0:20:50 in 1925
0:20:52 and 1925 to 1970
0:20:52 you could argue
0:20:53 it would have grown faster
0:20:54 with higher immigration
0:20:55 but they grew a lot
0:20:55 faster than we’ve grown
0:20:57 right and so
0:20:57 like I do think
0:20:58 if you have AI
0:20:59 if you have advanced
0:21:00 high productivity growth
0:21:01 if you have lots of
0:21:01 robots running around
0:21:02 I do think there is
0:21:03 a question of exactly
0:21:04 how much low-skilled
0:21:05 labor you need in the country
0:21:06 which bears on a lot
0:21:07 of the immigration debates
0:21:08 the high-skilled
0:21:08 immigration debate
0:21:09 is the one that’s coming
0:21:10 and it’s not really
0:21:11 top of mind right now
0:21:11 but it’s the one
0:21:12 that’s coming
0:21:13 and the reason it’s coming
0:21:14 is because I mean
0:21:15 look we need talent
0:21:16 of course to build
0:21:16 all the AI
0:21:17 build all the robots
0:21:17 to do all these things
0:21:18 and you see this
0:21:19 in the debates
0:21:20 around the universities
0:21:20 with the move
0:21:21 that the administration
0:21:22 is doing on foreign
0:21:23 students and so forth
0:21:24 and there’s this kind
0:21:25 of very one-sided
0:21:25 argument that’s happening
0:21:26 on that right now
0:21:27 which is you kind of
0:21:27 need a limited
0:21:28 high-skilled immigration
0:21:29 from the rest of the world
0:21:29 or you’re not going to
0:21:30 have the smart people
0:21:31 building stuff here
0:21:32 and I would say
0:21:32 you know look
0:21:33 like Joe
0:21:34 our portfolio
0:21:34 at our firm
0:21:35 is like the United Nations
0:21:36 it’s founders
0:21:37 from 100 countries
0:21:38 I benefited enormously
0:21:39 by working in a place
0:21:40 characterized by very
0:21:40 high-skilled immigration
0:21:41 the thing that’s really
0:21:42 coming to roost though
0:21:43 is this fundamental issue
0:21:44 which kind of nobody
0:21:45 wants to talk about
0:21:46 but I’ve started to talk about
0:21:47 which is it’s the intersection
0:21:49 of DEI and immigration
0:21:51 that has really I think
0:21:52 warped I think our perceptions
0:21:53 on high-skilled immigration
0:21:54 over the last 50 years
0:21:55 and you see this by the way
0:21:56 in like you look at like
0:21:57 the foreign enrollment rates
0:21:58 of the top universities
0:21:59 which went from like
0:22:00 2 or 3 or 4 percent
0:22:01 50 years ago
0:22:02 to whatever 27 or 30 or 50
0:22:03 and Columbia is over half
0:22:04 right
0:22:05 70 percent or whatever it is
0:22:05 and so there’s been
0:22:06 this massive transformation
0:22:07 in who gets educated
0:22:08 and then there’s been
0:22:09 this massive transformation
0:22:09 of who gets admitted
0:22:11 through affirmative action
0:22:12 and then as we now know
0:22:12 at DEI
0:22:14 and again this goes straight
0:22:15 to the political divide
0:22:15 in the country
0:22:16 which is if you’re a family
0:22:17 if you’re parents of a kid
0:22:18 where I grew up
0:22:20 and you’ve got a smart kid
0:22:21 and you think you’re going
0:22:21 to get them into
0:22:22 you know a top university
0:22:22 in this country
0:22:24 like you are fooling yourself
0:22:25 like there is no chance
0:22:26 right
0:22:27 because they’ve got their
0:22:28 well like
0:22:29 the top universities basically
0:22:30 the top universities
0:22:31 have basically an admissions program
0:22:32 that looks like this
0:22:33 it’s like DEI for white people
0:22:34 which is the donors
0:22:35 and all the fake sports
0:22:36 right
0:22:36 and so
0:22:37 a lot of fake sports
0:22:38 like I have a friend
0:22:38 who got into Yale
0:22:39 to play varsity croquet
0:22:40 which let me just say
0:22:41 is not a sport
0:22:42 that we played a lot
0:22:42 in rural Wisconsin
0:22:44 and then you’ve got
0:22:44 DEI generally
0:22:45 for the other groups
0:22:46 and then you’ve got
0:22:47 this immigration influx
0:22:48 and as a consequence of that
0:22:50 it is nearly impossible
0:22:51 for somebody coming
0:22:52 from like a midwestern
0:22:52 or rural background
0:22:53 or southern background
0:22:54 to get into the US
0:22:55 by the way
0:22:56 this doesn’t just affect
0:22:56 white people
0:22:57 this also obviously
0:22:58 we now see how
0:22:59 it’s affecting Jewish people
0:22:59 but it actually also
0:23:00 affects African Americans
0:23:02 in a very interesting way
0:23:02 which is actually
0:23:03 both the universities
0:23:05 and the corporate employers
0:23:05 are literally
0:23:06 this is true
0:23:07 they literally import Africans
0:23:08 so that they don’t have
0:23:09 to hire African Americans
0:23:10 because it still
0:23:10 counted as black
0:23:11 there was a great story
0:23:12 the thing that woke me up
0:23:12 to this
0:23:13 there was a story
0:23:13 in the New York Times
0:23:14 20 years ago
0:23:14 about Harvard
0:23:15 is this is
0:23:16 Harvard admits
0:23:16 black students
0:23:17 but which ones
0:23:18 back when the New York Times
0:23:18 could talk about
0:23:19 these things honestly
0:23:20 and it quoted actually
0:23:21 Henry Louis Gates
0:23:21 and Lonnie Guineer
0:23:22 at the time
0:23:23 at Harvard Law School
0:23:24 basically observing
0:23:25 that African Americans
0:23:25 were not benefiting
0:23:26 from an affirmative action
0:23:27 because Harvard
0:23:27 had figured out
0:23:28 that they could
0:23:28 import Nigerians
0:23:29 right
0:23:30 and again
0:23:30 it’s just like
0:23:30 great
0:23:31 the Nigerians are great
0:23:31 they’re very smart
0:23:32 they’re very productive
0:23:33 it’s fantastic
0:23:34 all other things being equal
0:23:34 you’d like to have
0:23:35 as many of them
0:23:35 in your country
0:23:36 but is that really
0:23:37 why we’re doing
0:23:38 the set-aside programs
0:23:39 and so there is
0:23:40 this really fundamental question
0:23:41 which is like
0:23:42 what level of untapped talent
0:23:43 exists in this country
0:23:44 that a combination
0:23:45 of DEI
0:23:45 and immigration
0:23:46 have basically cut
0:23:47 out of the loop
0:23:48 for the last 50 years
0:23:49 and how long
0:23:51 can we have this story
0:23:51 to everybody
0:23:52 in the Midwest
0:23:52 and the South
0:23:53 that says
0:23:53 sorry
0:23:54 because of historical oppression
0:23:55 your kids are SOL
0:23:57 this is the angry populism
0:23:58 people are worried about
0:23:59 that’s affecting our politics
0:24:00 yeah like what do you do
0:24:00 like this is what
0:24:01 I’ve really come to appreciate
0:24:02 from growing up
0:24:03 in the one place
0:24:03 and now being in the other place
0:24:04 which is
0:24:05 if you’re in the center
0:24:05 of the country
0:24:06 you’re just like
0:24:06 wow these people
0:24:07 really hate me
0:24:08 they really hate my kids
0:24:09 they’re really out to get me
0:24:10 and like that’s just
0:24:11 such a toxic dynamic
0:24:12 like that’s a very
0:24:12 very bad thing
0:24:13 for that to continue
0:24:14 so I guess to finish
0:24:15 on a more positive note
0:24:16 we have all these challenges
0:24:16 you’ve outlined
0:24:17 no sorry
0:24:17 it’s fair
0:24:19 I think in order to be optimistic
0:24:20 you first have to say
0:24:21 what are the challenges
0:24:21 and diagnose it
0:24:22 and then say
0:24:22 what are the ways
0:24:24 here’s an optimistic thing
0:24:25 which is we have talent
0:24:25 in this country
0:24:26 we have so many smart people
0:24:27 in this country
0:24:27 who are not being
0:24:28 properly trained
0:24:29 properly educated
0:24:30 and properly employed
0:24:31 we really genuinely do
0:24:32 we have tons of smart kids
0:24:32 running around
0:24:33 who have all kinds of potential
0:24:34 who have been completely
0:24:35 cut out of opportunity
0:24:36 for the last 50 years
0:24:37 so we’re going to have
0:24:39 this wave of productivity growth
0:24:39 it’s going to be
0:24:39 in the real world
0:24:40 with robotics
0:24:41 we’re going to start to build
0:24:42 hopefully to get the policies right
0:24:43 and it’s going to lift
0:24:44 all these people up
0:24:45 what are the bottlenecks
0:24:46 or things in the way
0:24:46 of doing that
0:24:47 we have the amazing
0:24:48 secretary of energy here
0:24:49 energy is obviously
0:24:50 a really key thing
0:24:50 to get right
0:24:52 there’s obviously the chips
0:24:53 there’s the critical minerals
0:24:53 you mentioned
0:24:54 regulatory stuff
0:24:55 is insane in this country
0:24:56 it needs to be fixed
0:24:57 like what are the biggest ones
0:24:58 you’re focused on
0:24:59 and how are we going to get
0:25:00 those to a place we need
0:25:00 that it ends up
0:25:01 with the optimistic outcome
0:25:02 so I say yes
0:25:03 those
0:25:05 so I mean
0:25:05 the good news on this
0:25:06 is a lot of it’s obvious
0:25:06 right
0:25:07 the minute you look at it
0:25:07 you’re just like
0:25:08 well obviously
0:25:09 we have to do these things
0:25:10 if you talk to anybody
0:25:10 running businesses
0:25:11 in any of these sectors
0:25:11 they’ll tell you
0:25:12 right off the bat
0:25:13 the things that need to happen
0:25:14 and the current administration
0:25:15 I think is pretty devoted
0:25:16 to a lot of this
0:25:17 the other positive thing
0:25:17 that’s happening
0:25:18 there’s this new book
0:25:19 out called Abundance
0:25:20 from Ezra Klein
0:25:20 who I would say
0:25:21 I disagree with
0:25:22 on approximately zero
0:25:22 of everything
0:25:23 but I think this book
0:25:24 is really good
0:25:25 and I think he and his co-author
0:25:25 you know
0:25:26 they don’t necessarily
0:25:27 have the policy prescriptions
0:25:28 I would outline
0:25:29 but they make this point
0:25:30 of liberals used to believe
0:25:31 in building things
0:25:32 right
0:25:32 well I mean
0:25:33 if you go all the way back
0:25:34 like communists
0:25:34 really believed
0:25:35 in building things
0:25:35 right
0:25:37 all like Soviet iconography
0:25:37 100 years ago
0:25:38 was all like rockets
0:25:39 and skyscrapers
0:25:39 and cars
0:25:40 and motion
0:25:40 and energy
0:25:41 and it was all amazing
0:25:42 and they built
0:25:42 all these huge things
0:25:44 and then liberals
0:25:45 up until basically
0:25:45 the 1970s
0:25:46 they really believed
0:25:47 in building things
0:25:47 they really believed
0:25:48 in building the future
0:25:49 and so Ezra
0:25:49 and Derek Thompson
0:25:50 are trying to recapture that
0:25:51 by the way
0:25:52 there’s a bunch of leaders
0:25:52 of that party
0:25:53 in Washington
0:25:53 that are now
0:25:54 pushing that quite hard
0:25:56 although it seems hard
0:25:57 to believe these days
0:25:57 but you know
0:25:58 there may be an opportunity
0:25:59 for some actual bipartisanship here
0:26:00 and again
0:26:01 it just makes sense
0:26:01 if the country
0:26:02 is growing faster
0:26:03 it’s going to be
0:26:04 a fundamentally happier place
0:26:05 because people
0:26:06 whichever side
0:26:06 of the political spectrum
0:26:07 you’re on
0:26:07 Reagan
0:26:10 there’s going to be
0:26:10 a sense of mourning
0:26:10 in America
0:26:11 there’s going to be
0:26:12 a sense of opportunity
0:26:12 there’s going to be
0:26:13 the sense
0:26:13 that your kids
0:26:13 are going to live
0:26:14 better lives
0:26:14 than you do
0:26:15 and I don’t think
0:26:16 that’s a particularly
0:26:16 partisan view
0:26:17 at the end of the day
0:26:18 and I think
0:26:18 there may be
0:26:18 an opportunity
0:26:19 to maybe bridge
0:26:20 the divide a bit
0:26:20 and I want to dig
0:26:21 a little tiny bit deeper
0:26:22 as we end
0:26:23 into what that means
0:26:24 because for me
0:26:24 for example
0:26:25 I think both of us
0:26:25 see how healthcare
0:26:27 doesn’t need to take up
0:26:27 20% of our GDP
0:26:28 right
0:26:29 it’s very obvious
0:26:29 that AI
0:26:30 can make these things
0:26:31 half a third the cost
0:26:32 for better outcomes
0:26:33 and yet
0:26:34 every one of our states
0:26:35 in this country
0:26:36 has very powerful
0:26:38 provider and payer lobbies
0:26:38 and has very powerful
0:26:39 cartels
0:26:40 that block competition
0:26:41 and so if we want
0:26:41 to go build something
0:26:42 with AI
0:26:42 we’re not allowed to
0:26:43 right now
0:26:44 do you see
0:26:45 the left and the right
0:26:46 tech working together
0:26:47 to fight these special interests
0:26:48 to actually fix
0:26:48 the regulatory state
0:26:49 because it’s not like
0:26:49 the administration
0:26:50 could just do it
0:26:50 right
0:26:51 it’s going to take
0:26:51 a lot of effort
0:26:52 like what does
0:26:53 that coalition look like
0:26:54 of the good guys
0:26:55 against this kind of
0:26:56 broken regulatory cartel
0:26:57 in all these industries
0:26:58 is that something
0:26:58 we’re going to all
0:26:59 have to fight
0:27:00 yeah so the way
0:27:00 I think about this
0:27:01 is there’s basically
0:27:02 three components
0:27:02 to the American dream
0:27:03 right there’s
0:27:04 a house for your kids
0:27:05 and kind of a definition
0:27:06 this goes back
0:27:07 to the geographic lens
0:27:08 the house needs to be
0:27:09 like near a place
0:27:09 where there’s like
0:27:10 great job opportunities
0:27:11 right so it can’t be
0:27:12 the house in the middle
0:27:12 of nowhere
0:27:12 it has to be a house
0:27:13 where there’s going
0:27:14 to be great jobs
0:27:14 and you know
0:27:15 a safe environment
0:27:15 and so forth
0:27:16 number one
0:27:17 number two
0:27:17 is health care
0:27:18 you need great health care
0:27:19 for you and your family
0:27:19 and then three
0:27:20 is education
0:27:20 you want to send
0:27:21 your kids to good schools
0:27:23 if you disaggregate
0:27:24 sectors of the economy
0:27:25 over the last 25 years
0:27:26 what you find is
0:27:27 basically everything
0:27:28 that technology touches
0:27:29 basically collapses
0:27:29 in price
0:27:31 and so television sets
0:27:32 and computer games
0:27:33 and anything with
0:27:34 electronics in it
0:27:34 basically
0:27:35 productivity growth
0:27:35 in those sectors
0:27:36 has advanced very fast
0:27:37 product prices have collapsed
0:27:38 everything is much cheaper
0:27:40 but if you chart
0:27:41 housing education
0:27:41 and health care
0:27:43 the prices of those things
0:27:43 are skyrocketing
0:27:44 right and we all see this
0:27:45 it’s just the price
0:27:46 of housing is exploding
0:27:47 the price of education
0:27:47 is exploding
0:27:48 the price of health care
0:27:49 I mean health care
0:27:50 is 20% of the economy
0:27:51 on its way to 50%
0:27:52 and so the prices
0:27:53 are exploding
0:27:53 and so it’s like
0:27:54 okay what makes
0:27:55 those three components
0:27:55 of the American dream
0:27:57 have these exploding prices
0:27:58 basically it’s two things
0:27:59 number one is
0:28:00 and these are interrelated
0:28:01 but number one is
0:28:02 technology is not really
0:28:03 touching them very much
0:28:03 and you could say
0:28:04 the tech industry
0:28:05 has done a bad job
0:28:06 at addressing housing
0:28:07 and health care
0:28:07 and education
0:28:08 or you could say
0:28:09 that those industries
0:28:10 have been resistant to it
0:28:11 but technology hasn’t
0:28:11 really touched them
0:28:12 that much
0:28:12 which means that
0:28:13 the productivity growth
0:28:14 hasn’t happened in them
0:28:15 and then the other thing
0:28:16 is they’re heavily regulated
0:28:17 they’re heavily dominated
0:28:18 by the government
0:28:18 they’re heavily regulated
0:28:19 and then in all three
0:28:20 of those sectors
0:28:21 the government
0:28:22 both restricts supply
0:28:23 right and so
0:28:24 zoning laws
0:28:25 university certifications
0:28:26 and so forth
0:28:27 right mean that
0:28:28 it’s very hard
0:28:28 to actually build
0:28:30 new of those three things
0:28:31 and then the government
0:28:32 responds to the political
0:28:33 pressure caused
0:28:33 by the rising prices
0:28:35 by subsidizing demand
0:28:36 and of course
0:28:37 if you subsidize demand
0:28:37 and it affects supply
0:28:39 you get skyrocketing prices
0:28:40 right and so every time
0:28:41 there’s a housing crisis
0:28:41 you know it’s a
0:28:42 perpetual housing crisis
0:28:42 in California
0:28:43 the answer always is
0:28:44 subsidies for home buyers
0:28:46 which always has the effect
0:28:47 of driving prices up further
0:28:48 and making the problem worse
0:28:49 right and so
0:28:50 those are the microeconomics
0:28:51 of what’s happening
0:28:52 I don’t think there’s
0:28:53 easy answers on this
0:28:54 but I think the acknowledgement
0:28:55 that this is in fact
0:28:56 what’s happening
0:28:56 and then I think
0:28:58 the people have to decide
0:28:58 that they do not want
0:28:59 to live this way
0:29:00 I think the marginal
0:29:01 American voter
0:29:02 needs to decide
0:29:02 look it’s just not
0:29:03 acceptable that if I can’t
0:29:04 spend three million dollars
0:29:05 I can’t have a house
0:29:06 that’s in a good neighborhood
0:29:06 with a good job
0:29:07 attached to it
0:29:08 and it’s just not
0:29:09 acceptable that a
0:29:10 four-year college degree
0:29:11 is going to cost a million dollars
0:29:11 which is what it’s
0:29:12 on its way to doing
0:29:13 and it’s just not
0:29:14 acceptable that like
0:29:15 this healthcare you know
0:29:15 monster is running
0:29:16 out of control
0:29:16 and so you know
0:29:17 in many ways
0:29:18 this is like the
0:29:18 fundamental policy
0:29:19 political question
0:29:20 of our time
0:29:20 that kind of needs
0:29:21 to be dealt with
0:29:22 again these issues
0:29:23 become much easier
0:29:23 to deal with
0:29:24 in a high growth
0:29:24 environment
0:29:25 right
0:29:25 in an environment
0:29:26 with very rapid
0:29:27 technological development
0:29:28 let me give you
0:29:29 the good news story
0:29:29 on healthcare
0:29:30 everybody talks about
0:29:30 healthcare
0:29:31 you can’t break
0:29:31 these curves
0:29:32 there’s one area
0:29:33 of healthcare
0:29:33 that is incredibly
0:29:34 sophisticated
0:29:35 technologically advanced
0:29:36 and the price curve
0:29:37 looks like Moore’s Law
0:29:38 the price curve
0:29:38 looks like video games
0:29:39 the price curve
0:29:40 is just a straight line
0:29:40 down
0:29:41 and the quality
0:29:41 of the service
0:29:42 has gone way up
0:29:43 and that’s LASIK eye surgery
0:29:44 right
0:29:45 and the reason
0:29:45 that’s the case
0:29:46 is because it’s
0:29:47 outside the system
0:29:47 it’s a discretionary
0:29:48 purchase paid for
0:29:48 by the consumer
0:29:49 LASIK eye studios
0:29:51 are in like strip malls
0:29:51 and they’ve got
0:29:52 three people
0:29:53 and like a super advanced
0:29:54 incredibly advanced
0:29:55 like laser eye machine
0:29:56 and you go in there
0:29:56 and you get zapped
0:29:57 and you have perfect eyesight
0:29:58 and every year
0:29:59 it gets better and cheaper
0:30:00 and so that’s like
0:30:01 an example of what happens
0:30:03 if you’re able to touch
0:30:04 these sectors with technology
0:30:04 and if you’re able
0:30:05 to get them out
0:30:05 from under
0:30:06 all the regulatory
0:30:07 and government overhang
0:30:08 and so that potentially exists
0:30:09 I think throughout the system
0:30:10 but fundamentally
0:30:11 we have to decide
0:30:11 we want it
0:30:12 and fundamentally
0:30:13 the population
0:30:13 in the country
0:30:13 has to decide
0:30:14 that it wants it
0:30:15 well I’m optimistic
0:30:16 more of the leaders
0:30:16 in the tech
0:30:17 and government sector
0:30:18 are going to be on our side
0:30:18 and push through
0:30:19 and fix these regulations
0:30:20 and the technology
0:30:21 is going to get us there
0:30:22 so thank you Mark
0:30:22 for being here
0:30:23 appreciate it
0:30:23 good
0:30:28 thanks for listening
0:30:30 to the A16Z podcast
0:30:31 if you enjoyed the episode
0:30:32 let us know
0:30:32 by leaving a review
0:30:34 at ratethispodcast.com
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