SPEAKER_00: all right everybody welcome back to the all in interview show we're very lucky today to have a candidate for the governor of california who is extremely unique in a number of ways first of all he's a republican and second he's a brit welcome to the program steve helton you've decided to increase the degree of difficulty in two ways but you're polling fantastic you've got

David Friedberg: five or six people in the poll so he's leading the field you're leading the field obviously it's going to get narrowed a bit when the democrats shiv a couple more people and get them out of the race

SPEAKER_02: and then pick their eventual winner in their cobble uh whenever that happens when nancy pelosi picks who's running but uh steve maybe you could start by sorry guys i got jokes but steve maybe you could introduce yourself a bit and tell us why you're running well hang on can i just say just after

SPEAKER_08: that great intro where you just tried to kill my chances in just a couple of words thanks a lot

SPEAKER_11: jason really appreciate it let me ask you to this up i've known steve since 2012 2013 when he and his wife rachel watstone moved to silicon valley rachel worked at facebook initially and then she worked with you jason at uber and then has had a great run and then steve similarly and you said it in a funny

Chamath Palihapitiya: way but ultimately this is an incredible land of immigrants and steve has a really compelling story so before we jump into the questions i know your background steve but i do think it's important go back to your parents your mom how you grew up and just set the stage for how you made it out from the way you started because i think that's important and then how you got to the united states

SPEAKER_17: and why thank you thank you i appreciate that and you're right we've known each other a long time now and it's a great joy to be here by the way just want to say it's a great joy to be on a show where i don't have to wear the the suit and shirt and you know that's one of the one of the things about running for governor that um i'm loving most of it but dressing up is not the favorite part for me so it's great to be with you i thought for this show you know we got to get it right i think that the back the more i think about my background the more i think it is really important um in terms of how i see things and what i want to get done um my parents are hungarian they were refugees from communism and i grew up in in england in a town called brighton on the south coast and you know we just had a regular working class um immigrant aspirational family story i guess you know it was my parents actually split up when i was young my stepfather's also hungarian he had an amazing

SPEAKER_18: story he was um a refugee as well but literally ran across the border he grew up in a small village on the west side of hungary and in 1956 when you had the soviet invasion and he tells this amazing

SPEAKER_17: story they heard on the radio the russians are coming and he and his brother and some friends from his school he was 14 years old like one year younger than my youngest son right now um and they just ran they literally ran for they said right we want our freedom they ran to the border

SPEAKER_18: barbed wire fences minefields got shot at by the guards all that half of them were killed and he ended up in a refugee camp in austria and from then to england so all of that i guess just gives you that

SPEAKER_17: sense of real appreciation for for actual for freedom for freedom and opportunity and i grew up in england worked very hard ended up at oxford university but my first job was project manager for a construction company i just wanted to earn money i just wanted to you know get out i think that's exactly the right phrase that you used and um that's been the story you know after oxford i went to work for a little bit of the conservative party in england then i worked or i worked for an ad big ad agency worked all around the world started my own business a couple of um offshoots of that including a couple of restaurants then went back into politics when my friend david cameron who i'd met many years before um had gone into politics got elected to parliament i helped run his campaign for the leadership of the british conservative party won that election and then worked with him to get the conservatives elected when he became prime minister in 2010 uh joined him in 10 downing street i was senior advisor to the prime minister most of my job was really focused on trying to implement our uh reform program and then in 2012 that's when we met we moved here because rachel actually before facebook she was at google um and she had this big global job at google she was running um comms and public policy for google worldwide i had my job in number 10. it was actually when our second son was born um it just

SPEAKER_18: it was a lot you know the travel for her and the time difference so that's why we moved here and i don't know should i stop there or do you want me to keep going you're also uh notably you became

SPEAKER_09: naturalized you're a citizen of the united states now so you have dual citizenship less people are confused by the accent yes running for governor and you're a citizen of let's talk

SPEAKER_11: about your political setup so being a child of hungarian immigrants raising communism you're

Chamath Palihapitiya: going to hear a certain version of what the role of the state is versus what the role of the family or the individual is then growing up in the uk i'm sure your attitudes either get cemented or change give us the setup what is the political evolution of steve hilton what did he believe and then what does he believe now and what has shaped these beliefs it's really i think it goes back to

SPEAKER_18: just around that when i first really started thinking about it all it was just as margaret thatcher was coming to power and you'd had the 70s in england were a disaster and a decade that was just the the economy was completely stagnant and slurotic unions ran everything um there was this period called the winter of discontent in 1979 when you had massive strikes um famously you know the dead went unburied and trash was piled up in the street just real collapse of everything and that's what thatcher came in to fix and i really did identify with that as well as with the very clear stand against communism and so really she was funnily enough when i was thinking about the the video that i made to launch my campaign about a year ago now we ended up putting that in there and i thought well actually that was the thing that got me going i was totally inspired by her but also the focus that she had on business and enterprise and hard work i remember my stepfather i mean they weren't at all political by the way it wasn't like some household where we talked about politics it really wasn't but he had this thing that stuck in my mind when he talked about the like in in england you've got the conservative party equivalent the republicans and for the democrats it's the labor party and i remember he just used to say mrs thatcher's for the workers and labor for the layabouts and i just this phrase stuck in my mind about the importance of work and hustle and i think about that all the time where

SPEAKER_29: do you think california is if you contrast well this is this is why i was just about to get to

SPEAKER_18: is we really are there there are so many things i see in california today that are exactly like the uk in the 70s you've got the massive dominance of the unions in policy making you've got a slurotic economy you've got massively high taxation i mean it was higher than the at one point i think the top rate when you add in the wealth taxes in the uk was literally 98 percent um but you had that confiscatory taxation and top rate of 60 percent and so on so very very similar and actually funnily enough um somewhat mike moritz actually sent me a report that um someone had done about the uk today and and again there's just these eerie parallels with just how how impossible it is to do anything in the uk to build anything the over regulation when i read this report it just is exactly like california today by the way one thing jason just to be clear i am a proud american now but i'm not i actually renounced my uk citizenship and i did that because i just wanted to be clear that i'm just to borrow the title of the show you wanted to be all in oh yeah literally i really i think it's really

SPEAKER_34: important everyone knows that and i am and you have some to get into some maybe some policy thanks for the

David Friedberg: background there you have some unique uh policy positions taxes i think is the most unique and

SPEAKER_00: dare i say pretty populist you want to have no state tax in california for people with under a hundred thousand dollars in income and then a flat tax for everybody over a hundred k but 7.5 how is that

SPEAKER_37: possible and is that something you've studied and where did this come from the tax plan the um that

SPEAKER_18: i put out there that was the first day of my campaign i think of it as pro worker and pro growth and i think we need both of those things because if you look at what's going on in california today just big picture obviously you can look at the data that's a real economic disaster i'm not sure people appreciate just how bad things are because hiding behind that data point of having the fourth largest economy in the world which is true and obviously i'm proud of that i want california to be big

SPEAKER_17: and successful and growing but that fourth biggest economy data point underneath that you've got this we're the state with the highest unemployment rate in the country and the highest poverty rate in the

SPEAKER_18: country tied with louisiana there's a united way report just the other about about a year ago they do it every two years sort of an assessment of of of living conditions in california and they found that over a third of californians cannot afford to meet basic needs and so the starting point for my tax plan is what can we do quickly to help people who are really struggling um if you think about it the working poor who aren't particularly um being taken care of by the welfare system they're working incredibly hard but they're they're being squeezed by all these costs we have the highest gas prices in the country as you know the highest electric bills everywhere except for hawaii um housing costs the highest in the country insurance all these costs are so high so what can you do to help working people quickly and so the starting point was and what's affordable the hundred thousand dollars mark i remember when when we i was just playing around with numbers actually i did it with um some economists from the hoover institution where i was a fellow the first couple of years that we moved to i taught at stanford um including in the public policy department also the d school at stanford but i was also a fellow at hoover and so we did the math on the tax plan there just just about a year ago and so that first part first hundred grand tax free actually in many counties in california today the def the official definition for low income is a hundred thousand um which so that number may sound very high to people in other parts of the country it's actually the definition in a lot of counties of low income so you've got people earning 70 grand 80 grand 90 grand in california they are paying 9.3 percent state income tax that rate is higher than the top rate in most states in america so to me that's ridiculous when you've also got all these other taxes that those exact people are paying sales tax property tax gas tax all of those are the highest in the country cutting taxes

David Friedberg: this significantly means you have to then also cut spending yes by 20 percent or so yeah

SPEAKER_18: just get the other part which is the 7.5 flat tax i just thought you know when you look at the the the the the facts about economic performance the fact that you know for example chief executive

SPEAKER_17: magazine ranks us and has done for the last 10 years or so the 50th out of 50 for business climate

SPEAKER_18: a big driver of that is tax and i'm sure we'll get into the the insane proposed billionaires tax and you know all these things that are driving wealth creation out of our state and business investment out of our state so it's not enough just to take care of or give some relief to people who are on the lower end of the scale you've got to actually have a pro-investment pro-growth tax framework and so apart from anything else the complexity is ridiculous of our tax system these endless different rates is ridiculously complicated um and that itself is a cost the bureaucracy and hassle associated with that that's why i think a flat tax makes sense remember this is in you know in the context of federal taxes all these other taxes it's not the only component but the cost is to get to that cost you've got to reduce spending exactly as you say and basically the the the cost of that in total is about an 18.5 reduction in revenue which takes us back it takes us down about 60 billion something like that which is not even going back to what the budget was just before the pandemic they've actually done if you look at the budget of the state of california it's nearly doubled in the last 10 years in the last five years it's gone up something like 75 and so this is just bringing the budget back to

SPEAKER_17: achieve that entire tax cut would bring the budget back just to where it was roughly before the pandemic

Chamath Palihapitiya: let me just summarize so if you make between zero and one hundred thousand dollars a year as a california resident under your plan no tax no state income tax no state income tax if you make one hundred thousand dollars and a dollar and above you pay seven point five percent flat tax yes that's the concept okay how many californians does that impact so what percentage of the population now get

SPEAKER_18: that affordance if you were to if you were to be successful how the tax numbers usually only households

SPEAKER_17: and so it's about seven million households would benefit from from the under hundred thousand

SPEAKER_51: and do you know how many that is as a percentage well working house we got 40 million people i

SPEAKER_17: think that's about um probably just over a third something like that okay so a third of homes now

SPEAKER_11: essentially go to zero tax state income tax there's all these other taxes there yeah now the pushback

Chamath Palihapitiya: would be if we then take a dollar for dollar from the operating budget programs will suffer and to your point your comment is i'm putting words in your mouth but you fill them in well not really because we're just going to go back to 2019 2020 budgets and the difference was we spent a dollar in 2020 we now spend two dollars and nothing has changed so yeah go from two dollars back to a dollar fifty

SPEAKER_17: and everything should be fine is your point yes and i'd actually go further than that so first of all what we've seen happen to the budget is basically the expansion that we saw in in the in the pandemic

SPEAKER_18: and afterwards has gone baked into the baseline which is totally unsustainable and so we've got to get back to even without tax cuts i would argue you've got to get back to a more reasonable growth in spending because you go bankrupt um as we're seeing with these deficits that that we're getting even when in times when we're not in recession and taking money out of the reserves out of the rainy day fund to plug the gaps which is what they're doing totally irresponsible fiscally but actually it's more than that even if you just if you don't change anything in the composition of the spending and just get back to where we were that gives you scope for a major reduction in tax but the other part of it is what we're discovering in terms of where the money is actually going and so obviously the whole fraud story has exploded as a national political and economic story um ever since nick shirley's first

SPEAKER_17: investigation in minnesota just around the time of thanksgiving last year well we've been making our

SPEAKER_18: own um contribution to that so a few months ago i set up our i literally called it cal doge california department of government efficiency i know that's a controversial brand but you know then the idea of it efficient government is something i think everyone would support so i thought why not use that because everyone knows what it is so we've been just looking at the published data on spending to find examples and to make an estimate of the total amount of fraud waste and abuse in the system and we've now published four separate fraud reports out of cal doge when i say we by the way it's i mean this is a longer story we can get into but one of the ways i think i'm running this campaign differently is that i'm actually putting together a team uh before the election of the of in terms of others who will run with me for statewide office because you've got some very important positions alongside the governor that are going to be crucial in putting us back on track in this instance the state controller is very important because the state controller is an elected position has the legal power to audit any organization receiving state money and to stop the flow of money if there's any um suspicion of improper spending so there's a guy running with me called herb morgan and we've been

SPEAKER_17: doing this work together and we've published four reports now three of them on individual examples of fraud we can get into that in a second if you want to know some of the examples are really shocking and then the fourth one was an estimate of the total and we just went through

SPEAKER_18: published data from the state auditor from medicaid error rates and so on to make an estimate

SPEAKER_30: of the total amount of fraud what did you find and give us a couple of examples here's some specific

SPEAKER_18: examples the second fraud report um it's a classic one billion dollars over the last 10 years 100 million every year since 2015 this is from the climate change mitigation uh fund which is part of the cap and trade system this is actually gas taxes and surcharges on electric bills and so on 100 million a year was allocated to be spent on climate change mitigation in this case it was solar panels for low-income apartment buildings so we actually tracked that money and um with an ai partner that can get all the reports and of that 1 billion total in 10 years the actual amount spent on the purported benefit here solar panel installation was 72 million 928 million actually went to non-profits doing all all the usual democrat associated bullshit frankly voter registration um environmental justice campaigns all that kind of stuff the actual thing was mostly spent on that that's one billion dollars the first one was the cannabis tax proposition 64 legalizing cannabis there's a tax associated with that supposed to be spent on um substance abuse prevention we found 350 million dollars that was supposed to be spent on substance abuse prevention again going to this network of non-profits over 500 of them and small individual grants when you look at what each of those organizations does it's all the usual stuff voter registration activism so the third one was project home key that we we looked into which was the homelessness thing that they set up after the pandemic which was buying up property for homeless people um and sometimes building new property for homeless people or converting hotels 3.8 billion that was on that one that we found i mean there's others have found other amounts um most of which went into the pockets of

Chamath Palihapitiya: developers without any um real the california budget if i'm not mistaken 350 odd billion 359 this year yeah

SPEAKER_11: what percentage of it in your best estimation with you and your team do you think is inefficient fraudulent

SPEAKER_18: wasted well our number over the last five years total our estimate was 425 billion so averaged over the years it's about 80 billion a year so that's so it's around you know 20 or so that's unbelievable yeah

David Friedberg: and now just to bring some reality to the situation you would have to get through the legislature which is both controlled by democrats you can't unilaterally as the governor just say hey we're cutting these services and we had a governor schwarzenegger who tried this very thing he had to move to the center

SPEAKER_02: you of course i believe in california have a line item veto so you have some balance there but this

David Friedberg: is fantastic for people to maybe get a reprieve from taxes you're going to get a major fight

SPEAKER_71: with democrats to cut any spending what's your plan there if you were to win so jason a couple of things

SPEAKER_18: you're right about that um and i'm very thoughtful about the realities of these things and i always make clear that i think what is certainly on the tax plan that tax is definitely you can't do that without the legislature i think that actually we'll get a we there's a possibility of a consensus around some of these items where we can actually work together with the legislature to make it happen one indicator of that is actually one of my democrat opponents in the governor's race katie porter um actually you know we were doing a debate the other week in fresno and she just said we're talking about affordability or whatever it was and she said well i'm i've decided i'm stealing steve hilton's tax plan i agree with him first hundred grand tax free and i think we should take good ideas where we find them so this is an interesting example that i think that that part of it i think we may be able to actually persuade the legislature to do and then i noticed she yelled at you and said get the hell out

SPEAKER_75: of her shot exactly exactly exactly than hell um so the the attitude that i've got on that whole

SPEAKER_18: question of the legislature is that when i'm elected that's and i'm sure your eyebrows are raised and saying what are you talking about it's impossible for republicans to win and we'll get into that but i'm i'm doing this on the basis that i will and i'm preparing to actually start implementing the big changes we need to make um in a thoughtful manner on day one because otherwise what's the

Chamath Palihapitiya: point of doing this steve do you think that there's legislative agreement or momentum to give you the win even though to your point i think it's quite significant that the democrats would signal that it's a legitimate policy proposal but do you think that if you win people would see the

SPEAKER_77: forest from the trees and realize how important it would be to take salaries under a hundred thousand

SPEAKER_64: to no state income tax look that we i've seen the you know the democrat arguments now up front many

SPEAKER_18: many times we've done a lot of events together some of the televised debates many more that aren't televised we're literally all saying the same thing in all the debt in terms of the diagnosis of the problem it's incredibly expensive to live here people can't you know people are really struggling the business climate is a disaster we're massively over-regulated we can't build anything everything takes too long everything's too complicated you know there's a there's a real consensus about diagnosing the problem among all the candidates and so i think that that doesn't mean that we agree of course on the solutions i would argue that the democrats all you know as in some version of more of the same actually despite what they say about the problems but i think that um there are certain things where we will be able to get agreement i also think that when you have a situation where you have the first republican governor elected for 20 years that really will change the dynamic in sacramento i think it will it actually may you know loosen things loosen things up a little bit because i think that there are people there in the legislature who really understand that things have gone too far some of them said it to me personally democrats there but they feel constrained by the current political situation the machine being in control they can't really move and i think that'll shake things up a little bit that's one point secondly you know i really do have experience working across party lines like this i think that i'll be able to bring some of that into play i mentioned earlier i worked in in 10 downing street senior advisor to the prime minister he was a conservative prime minister but it was a coalition government um and i literally shared an office in 10 downing street with my opposite number from another party and we would you know hash things out and argue and you know we were part of the team that negotiated a coalition agreement and then tried to implement it and i think that those skills of actually putting something together where you don't agree about everything but you can make some things happen and you'll be useful in this situation and i think we can i mean look everyone agrees we can't go on like this in california and it's not farcical to

David Friedberg: think a republican can't win here pete wilson did two terms schwarzenegger did two terms that's 16 i guess of the last 36 years it is completely conceivable that a republican could win and you and katie porter have the same plan i think chad bianco has the same plan which is under a hundred thousand all of you agree no taxes that you're all attacking affordability they don't believe in cutting services though they want to increase taxes on businesses if i'm correct and so why is

SPEAKER_00: that plan not as good as yours i guess is the question which one do you think will be more more appealing to the voters with the voters i think they'll all agree paying less taxes fantastic makes you more competitive with florida and texas but if they had their druthers they're probably going to

SPEAKER_07: want to see google and apple pay more in taxes and not lose their services yeah but we're losing jobs

SPEAKER_18: and i think that that's the consequence of of if you're squeezing um businesses and high earners more and more and you're seeing it right now you're seeing the business exodus um if the billionaire tax proposal goes through i mean that absolutely puts you know i think that's just a complete disaster for for the tech ecosystem and what we've built in silicon valley over the years and all the job creation and and wealth creation that comes with that um you're seeing i mean i just it's not just tech everywhere you go in the state there are so many conversations you sit down with business people you know we we are we are on the brink of leaving i don't think people realize quite quite how near the cliff edge we are um and if and it's i'll give you another example we are just in pomona the other day down in southern california fantastic companies sheet metal um it's an hvac duct manufacturing it's exactly the kind of thing you'd want to get the union jobs actually it's a great um you know manufacturing facility they are making the eight this hvac systems the air conditioning incredibly important as as you know for uh tsmc and these semiconductor factories and all these the high-end manufacturing that's happening in other states in and these these facilities now massive amounts of investment in the ai economy and and tech more broadly but none of it's happening in california i mean we just published our policy report on that today how we can get some of that full stack of those jobs in california but that company they said to me since the the facilities are all now being built in other place in other states we're on the brink of moving our facility to be closer because what's the point of making this stuff in california it's not going to be used because nothing's happening nothing's going to be happening in california so you have to stop this

SPEAKER_11: squeeze on business you really do let me ask about the broader cost of living for a second probably the most impactful cost to people's lived experience is the cost of housing yeah double click into that for a second for the 40 million residents of california what is going on why are rents so high why are

Chamath Palihapitiya: homes so expensive and what can actually be done to make the cost of living and rent cheaper so the thing

SPEAKER_18: this particular issue i think almost captures better than anything else the underlying structural reasons why everything is so difficult in california and so expensive because you've got these three structural forces that i think underpin the problem and show why a democrat can't fix it and the three things are union power litigation and climate dogma and they all come together in the housing story the first part of the story is that we're just not building enough homes for the number of jobs that we're creating and the size of our population it's a classic supply and demand situation now within that there are certain you know wrinkles you could point out that because of rent control which has got completely out of control there are a lot of empty properties in california that could be used to house people but they're not because landlords don't want to don't want to do it because the the rights have got swung so far in favor of tenants but i don't think that's the major driver the major driver is the fact that we just haven't built enough housing of different kinds and if you go through the reasons for that and why it's so expensive it brings into play these three factors first of all it just costs more to build anything in california the same exact floor plan house apartment building industrial building whatever it is cost just two or three times more to build in other in california than in neighboring states the first reason is the building codes the actual requirements for construction which is way more owners driven by

SPEAKER_63: climate dogma that actually doesn't really provide much what does that mean climate dog well you have

Chamath Palihapitiya: to install here we are because like nevada's hot and drought ridden and arizona has issues so what is it that we say that those states don't say so when you build apartments or when you when you build

SPEAKER_18: parking you have to put in ev charging um and the scale of what's required for the ev charging just makes it more expensive you have to you know like you do a parking structure you have to reinforce the floors the bays have to be wider just it adds you can have you need you have fewer bays per structure um there's specific costs associated with that um solar panels we talked about that earlier in terms of low-income apartments that the taxes are paying for um developers have to pay for that as well um insulation um energy efficiency all these things are good and i think that's pretty much the story of california which is things that start with good intentions actually end up being taken to an extreme where it just makes it too expensive to build at a rate that people can afford to buy

SPEAKER_93: the properties and the other two are really that sequa where anybody can sue on exactly the private

SPEAKER_18: right of action under secret so that and but let's unpack that because that brings together the three things climate um litigation and unions because seek with the california environmental quality act itself is is a nightmare in terms of this the amount of regulation you have to comply with the private right of action means anyone can sue seventy percent of sequa lawsuits are used to block housing most of those lawsuits are filed by unions they're used as leverage to negotiate what they call project labor agreements where you have an agreement for the site and usually they have one or one of both one or two of these components both of which sound great skilled and trained workforce which means union only so that's a closed shop and prevailing wage again sounds very good but it's two or three times market rate wages so both of those things inflate the cost often i've spoken to many developers there aren't enough union workers in in the area to actually do the job so they have to sometimes fly them in from other states to do the job and the cost of travel and accommodation it's just this is the cage there's

SPEAKER_09: no equivalent to sequa in texas uh where i now reside uh after 20 years in california the other thing is

SPEAKER_92: the fees it's 30 000 per door in fees uh to the government exactly yeah to to build a door in

David Friedberg: california it's under a thousand in texas and in california has three times the new units per capita than california so every year we produce three times as many new homes per capita just a simple

SPEAKER_11: question though guys put this into chat gpt or whatever california's mandate with sequa

Chamath Palihapitiya: is to protect the air protect the water protect the land by some measures texas doesn't have it is it the case that texas's air is worse the water is worse and the land is worse no definitely not so is is it roughly the same meaning the particular count the pollen count is the air quality the same because if it is then what is sequa doing other than just slowing down and retarding the progress of housing why hasn't that studied because i think again all of this guys comes back to when the data is presented in a way that's factual there's very little room for people on both sides to argue it because they're all relatively smart it's when it's presented either in a partisan way or by somebody who reeks of partisanship that i think people attack the messenger versus the message so i'm just trying to understand why hasn't the california government confronted this it has the highest rents in america it has the highest poverty rate in america and it also has the highest regulation that has the lowest and the slowest unit housing growth steve i guess what i'm asking you is how does that not get to the legislature okay i'll tell you it's i'm

SPEAKER_60: afraid the answer is the corruption within the system and the interest groups that have taken over

SPEAKER_18: the system i'll tell you a story which is my first i know a lot about housing policy because it was the first area of policy i studied when i decided that i wanted to get into the whole world of policy and politics in california i actually tried to get a ballot initiative qualified for the ballot that would have two elements to it one is what jason just mentioned capping impact fees which are now up to about 20 percent of the cost of housing um i wanted to do a statewide cap of three percent um of construction cost and the second component was eliminating the private right of action under secret i didn't succeed in getting it on the ballot didn't raise enough money in time so then i tried to pursue it through the legislature said well let's see if we can make some something happen in the legislature so i went to sacramento i took meetings with legislators started to engage with sacramento there's one meeting i had with the legislator who was just described him as good on housing as a person you need to talk to and we had a great meeting they said this would be transformational i said great let's work on it together bipartisan you're democrat i'm republican that'd be great people like that oh i couldn't support you publicly why not well the unions would hate it why because if you take away the private right of action you take away the union's leverage and i said yeah but you just told me it would be transformational we were sitting in an office you could see the state capital down below high up they just wave their arm around like this and said yeah the unions run this place and that's the real reason if you look at for example newsome touted these two bills last year ab 130 ab 131 that were going to solve the housing crisis he said this is the moment where we are embracing abundance and all the rest of it big sequa exemptions for certain types of housing but if you look at the fine print tucked away in it you only get the exemptions if you have these project labor agreements and union union closed shop and prevailing wage so you're just writing back in exactly the things that sequa is causing the cost increases from so because the union and what let's follow all the way through if you look at gavin newsome's political donations over the 16 years he's been running statewide just as a proxy for democrat politicians by category the number one category government unions number two trial lawyers number three non-government unions so these are the that's why nothing changes because the the interests that benefit from this system are funding the politicians that make the decisions yeah and

David Friedberg: jump off to your other question of like is the environment better since 1970 when this regulation came into pass california still has the worst air quality in the country largely because of the

SPEAKER_02: addiction to cars and traffic and then texas as a comparison just has industrial waste problems because we don't want chemicals here or chemical processing done here so we have a car loving culture

SPEAKER_50: in california to your point jason is part of our cultural fabric driving down highway one it's just

SPEAKER_11: a very iconic thing that's embedded in the state steve i have two questions what has all of the

Chamath Palihapitiya: incremental regulations done with respect to climate quality whether it's ev mandates or the ice engine requirements and then separately just as a more general way to explain it why is gas in california seven eight dollars a gallon and why is it three dollars everywhere else why is ours more than 2x

SPEAKER_50: that it costs everywhere else including other states that are also quite expensive to live in

SPEAKER_64: well also that they don't that we we have the highest gas in the country including hawaii in the middle

SPEAKER_18: of the pacific ocean even though we have abundant oil reserves here so we have way higher gas prices than states that don't have oil reserves we actually have very significant oil reserves in california um the the fundamental reason that gas prices are so high is because again in the name of climate but without actually actually in this case it's counterproductive to climate um instead of using the production that we have here in california i've been to the oil fields in kern county mainly near bakersfield um we are now importing nearly 80 percent of the oil that we use over the period of the since really this all started in 2006 with the passage of the global warming solutions that was the sort of foundational climate legislation in california over that period our use of fossil fuels has declined but not that much and the proportion of our energy that's coming from fossil fuels is is about 80 percent still the rest of the country it's about 81 so it's barely any different but the difference is we used to produce most of what we use in state now we are importing nearly 80 and that has driven up because you have to strip it for halfway around the world our number one

SPEAKER_106: provider is iraq right now that's the number one source of oil sorry sorry sorry sorry sorry sorry

Chamath Palihapitiya: the state of california itself we are the wholly dependent on iraqi oil to sustain our economy it's not

SPEAKER_18: wholly it's it's the number one provider yes so if you look at the sources of oil number one iraq number two i think it's ecuador and brisa but the the broader point on that is because the road we said let's just go back a few steps we had a really strong energy industry and infrastructure in california where we produce most of the oil and gas that we use and we had refineries about 40 of them um around the state mostly in the bay area down the la that refined and turned it into products that we use gasoline and so on um now we're down to seven refineries one of the main reasons for that is that we're not producing what we what we what we could be refining we're shipping it in instead because there are no pipelines of of there are no oil pipelines into california whatever we don't if we don't use our own we have to bring it in by tanker um because of this and because of the the the fact that the refineries were built to to refine california crude which is known as heavy crude um there are different types around the world you've got to have a good match iraq provides iraqi oil is a good match the other place whose oil is a good match for our refineries is south america and so as a result of democrat climate policy we are now expanding oil drilling in the amazon rainforest in order to provide the right kind of oil for california's refineries i mean it's just so utterly insane and incoherent and of course in the process we're spewing out carbon emissions because the tankers run on what's called bunker fuel which is the most polluting form of transportation there is and just to make the whole insane scheme work carb the california air resources board which is obsessed with having all other businesses account for their carbon emissions right down the supply chain miraculously the carbon emissions for the oil imports are only counted from when they're 12 miles off the coast of california it's just so

SPEAKER_02: crazy yeah the change change the finish line the taxes add like a dollar a gallon and then there's

SPEAKER_102: this carb standard it's about 60 yeah it's just it's more like 61 i thought it was 65 i can't remember exactly it's just going up again yeah yeah most of the most of the two dollar premium as it were for california is regulatory not taxes yes and most of the oil that's been pulled out of the ground in

SPEAKER_116: california we got the easy stuff out what's left is generally dirtier or thicker that's not right i've

SPEAKER_102: had a lots of conversation with the industry on this and the the problem is that you've got

SPEAKER_18: fields that could be producing but and actually it's a good example of what you can do as governor without the legislature because the way that they've been shutting down production is not legislatively it's through an agency of the state government called calgem the california department of geologic and energy management and it's simply a question of refusing to issue permits for the various stages of production including maintaining existing wells or expanding there's a process called side tracking where you can take a well that's doing five barrels a day and increase it to 100 whatever and then drilling new wells in existing fields and they're denying permits for all of that actually you can pretty much turn that around overnight by appointing people who are pro energy who will issue permits because i think there's a simple common sense rule here which is as long as we're using oil and gas in california let's use our oil and gas rather than importing it but my conversations with the industry is that i said look what could what could we do if we had a kind of green light from a governor that and a regulatory framework that just says let's do what we can let's produce what we can the estimate that i've got from them is that we can double production

David Friedberg: every two years in california if we're already one of the big gas burning states with the worst air or previously in my state you know then you're going to get into the circular conversation with the public

SPEAKER_02: of do we want the air quality to decrease and most people would say the ev credits were actually a good thing because we had 20 years of smog going down even though we're still worse it's gotten a lot

SPEAKER_18: better so that's what that's to do with carbon but that there's a real mis misunderstanding so this i completely agree on air quality and and one of the major advances that has been made is on expect to pick in the la basin is on smog obviously i wasn't here then but people say you know it's really bad and now it's not you have clean skies and you can see mount baldy or whatever you know it's like a really different world but that's nothing to do with carbon emissions um and so and that that's to do with actually the the main driver of this of the air quality improvements in california actually are technology um and if you look at evs i mean ev penetration even with all the subsidies and so on it's incredibly low in california so you can't you can't um point it's about four or five percent

SPEAKER_60: something like that tiny so actually the improvements in air quality dramatic improvements that you saw

SPEAKER_11: in la were nothing to do with evs steve i want to switch topics to education this is a thing that we on the pod talk about a lot we're all the byproduct of a pretty fantastic education system

Chamath Palihapitiya: affordable education frankly at every level we had options to pay for it yeah we all had access to things like ap to really distinguish ourselves even jason yeah um it's true what's happening in the california education system why are we stripping away things like ap and how do we tie compensation to outcomes because i think yeah a lot of us would want to pay teachers triple but we'd want to tie it to something that says wow the test scores are going up our kids can read our kids can write our kids can compete on the global stage and it just feels like we are moving backwards we really

SPEAKER_18: are and it's just i mean the numbers are horrific i mean you've got first of all we spend nearly the most of any state per student right now in this year it's about 27 000 just it's more than just over 27 000 per student per year in california if you take the average out the money and we get some of the worst results in the country i think the number for you know 40 is 47 that meet basic standards in english and reading so less than half meet basic standards for math it's 35 so two-thirds do not meet the standards it's just an insane level of failure considering we spend nearly the most and i think again you've got to look at this in a practical way there's a long-term structural reform that i think we need because the the driver of this is really the grip on the government school monopoly of the teacher unions who increasingly have been driven by ideological factors you saw that for example in the pandemic when you saw the you know the longest and most destructive school closures in the country and i was always struck by la the teacher union in la when they put out their demands for reopening schools it was just a list of politics a wealth tax medicare for all something about palestine you know it's just they've completely become an organized political interest group that's about their members and broader political goals rather than anything to do with the interest of students and kids in school so i think that the fact that you've got this monopoly is of the public tool system controlled by the unions they of course in turn control the politicians as i mentioned earlier the number one donor to democrat politicians of these government unions including the teacher unions and so you've got to break that grip so i think that long term the answer is to move in the direction of school choice which i've always been a strong advocate of you're seeing that school choice revolution across the country now many states moving very rapidly in the direction with really good results it's not a panacea um but i think that that is the long-term structural change you need but that takes a long time and it's going to be very very hard to get that moving in california given the fact that the teacher unions basically control the legislature through the democrat politicians they put there so there are some practical things that we've got to do immediately to improve these basic standards and here we got to look at what works elsewhere and you see a lot of a lot of attention now on mississippi rightly so because for one-third of this spend per student than california their results are spectacularly better and it's really happened in the last 10 years and there's some simple practical things that they do number one is how you teach kids to read there's a technique of reading instruction i mean this was a debate i remember having back in the day in england in the 90s and it's pretty much settled then which is there's a technique called phonics it's a way to teach kids to read and it's totally clearly established as the most effective it's barely used in california schools at all it's like in a very small proportion of schools of public schools so that's something that the governor can drive forward through the state board of education where you appoint all the members secondly in mississippi they introduce something very common sense which is as everyone in education says up to about third grade you're learning to read and then from fourth grade you're reading to learn and if you can't read you can't learn and so there's widespread consensus that reading by third grade by the end of third grade is incredibly important benchmark in mississippi if you don't read but you're not don't pass the basic reading test by end of third grade they give you a bit of help over the summer and if you still don't make it you repeat the year they don't let you go forward that single change has transformed their results and then your point about accountability also happens there where they give and this is something else that we could implement here which is taking the publicly available test scores and data but really assigning it in a very visible way to individual teachers and individual schools and that's one of the proposals i've got in my campaign which is a grade for every school and a grade for every teacher so we can reward the good ones and

SPEAKER_00: remove the bad ones two more topics that californians are very passionate about and have a lot of

SPEAKER_02: opinions about i think one is pretty challenging and the other one seems pretty easy and other states

David Friedberg: have handled it where it's easier crime and then homelessness crime obviously as a society we've seen violent crime go down over the long arc of our lifetimes in the last 40 or 50 years but california still 30 percent more violent than the rest of the country so we definitely have a violence problem

SPEAKER_00: specific to california and if you live in the major cities san francisco los angeles they let people out for petty crimes under 850 dollars there seems and we see going to a drug store everything's locked up so there is a feeling and a lot of debates over the numbers that there's a lot more property crimes some people claim people don't report it anymore that was my lived experience in california

SPEAKER_82: what is your take on crime and then we'll go to homelessness yeah i mean it's just it's this classic

SPEAKER_18: thing in california where they seem to be brilliant at passing laws right every year more and more laws more and more bloat and bureaucracy more nanny state nonsense last session for example they passed this is one session one thousand one hundred and eighteen bills one that that's the number of bills that the legislature passed right we did another thing outside the state capitol i mean i'm not very tall we printed them all out it's like double my height i mean just ridiculous the point i'm making is really good at passing laws but not very good at enforcing them there's just something missing in terms of the app of the willingness to just enforce the law that's going to be one of the main points i make in terms of homelessness but when you get to crime there's just this attitude i mean there's something off about how the left has has seen this issue only just when you think it's you know the worst excesses of defund the police and all that have receded you've now got them popping up what is it this new thing micro looting right oh micro looting is the new york times and slack podcasts are going on about oh it's fine because it's just social justice and we we're allowed to kind of basically steal things because it's okay it's just unbelievable subversion of basic um values and morality it's just unbelievable on crime it's very decentralized in terms i mean there's some state things that need to be driven remember that the law that you're talking about the legalized theft up to 950 a day that has that part has been overturned that was prop 47 which was a few years ago has been overturned by prop 36 which was overwhelmingly passed in 2024 by about 70 but of course it's not being properly implemented gavin newsom was against it and so were most democrats in the state the people passed it anyway but now there's real resistance to enforcing it which is ridiculous in terms of the overall picture though it is very localized you know you've got local police forces and sheriff's departments and so on so my focus has been what can you do as governor and then one of the biggest drivers i think this this caused the problem is it's really started with jerry brown before gavin newsom gavin newsom's accelerated it which is the prison closure program they've they've they've they've basically also this is classic california they've reduced the number of prison places by half guess what happened to the budget it doubled not quite not quite that bad but like it's a classic they double they cut the numbers in half double the budget but the point the serious point is that you've had tens of thousands of really dangerous violent criminals either released directly into the community or more you know um destructively for this for the system transferred to county jails which are now completely overcrowded and therefore at the local level the whole system is aware that you've had all these transfers from state prison the system is full and so there's no capacity and that really undermines the kind of accountability that judges and prosecutors would want to seek at the local level because they know the jails are full and so that in turn undermines law enforcement because they say what's the point i mean i hear this term all the time from law enforcement around the state i'm traveling the state the whole time they talk about catch and release as the basic operating rule for local for the kinds of crimes you're talking about you catch them they just release nothing happens and so that that undermines law enforcement why bother if we're just going to bring these people in and nothing's going to happen to them and that in turn undermines public confidence because everyone sees that and then they as you just said don't bother reporting it so a simple thing we can do that is completely within the governor's control is stop and reverse the prison closure program which is what i've committed to doing is to increase prison capacity in california that means that you can relieve the pressure on county jails but also that means that you can use the prisons for what they should be doing not just bringing accountability you commit a crime you should be punished but also rehabilitation we've got one with not we're not the worst but one of the worst recidivism rates in the whole country and if you had if you if we did one of the best one of the best states is virginia they're they're less than half what we have that would massively reduce crime if you just get you know this that you've got to take seriously the rehabilitation part i mean a huge proportion of prisoners in these jails they can't read properly many have dyslexia you know you you've got to have a really serious view on it and they just don't they have an ideological view i think that is the problem with so many of these issues it's ideology in this case it's decarceration can't have people in prison prison is racist criminal justice reform all this

SPEAKER_112: ideology instead of just practical things to keep people safe newsome shut down four or five of the

SPEAKER_02: california state prisons are absolutely correct uh according to my notes and then it peaked in 2006 california had 165 000 people in state prisons now 93 000 people so it is definitely a trend uh and i think a lot of folks who are living here or who are living in california where i used to live are not in favor of that uh looking at homelessness is it intractable in california one thing i'll just

SPEAKER_18: point out if people are interested in digging in further to some of the things i've been saying there's a couple of places you can go for real depth on this which is the last three years um i've been traveling the state and kind of learning about this stuff and developing solutions and i had a policy organization for that called golden together golden together.com and you can find policy reports on many of these areas we've discussed and more including one on homelessness called ending homelessness and actually my real partner in developing that was so called michelle stebe who's done a lot of work on this she actually run um homeless shelters and and really at the at the kind of street level of this for many many years also someone called tom wolf who's given me a lot of great advice he's in san francisco a recovering addict um a recovered addict who's who's just fantastic he's very vocal

SPEAKER_02: on twitter and uh yeah so very common sense approach yeah exactly okay so it's very simply

SPEAKER_18: i'll try and sort of capture it simply it's three points number one it actually already is illegal to live on and the homeless encampments already are illegal they've always been illegal um it's another example of where we just got to enforce the law um for years local politicians in california hid behind a court ruling that is called the boise ruling from many years ago which stated it's the ninth circuit ruling applies to the western states which is that the art the statement there was you can you can't remove people from the street unless you have sufficient shelter available locally and they use this to say we can't remove people because we don't have enough shelter it didn't define what shelter was they defined it as these permanent supportive housing units costing nine hundred thousand dollars a door but it could have been you know a camp with cots you know there's no reason but even that excuse has been lifted because there's a supreme court case called grants passed versus oregon in 2024 overturned that so there's no excuse you these people running local governments where they they they have the power and the legal authority to remove every single homeless encounter and they should and my argument is i'll give that once i'm elected i'll give them a certain amount of time and if they haven't done it then i'll use state law enforcement resources to take people off the streets and then you get to point two and three of the plan which is what do you you got to give people help in a compassionate way help them get their lives back on track so over eighty percent of people who are homeless have drug or alcohol problems addiction or meant severe mental health problems so you got to deal with that so the second part is drug and alcohol recovery you got to you got to get people into recovery that used to be the rule in california rehab or jail and we've got to get back to that it can't be an option we've got plenty of service providers who can do it you've got to require it i mean last year even the going back to our point about the legislature even the democrat legislature passed a bill called the sober housing act which would have taken a certain proportion of homeless spending and allocated it to a shelter where you had a requirement with sobriety newsom vetoed that bill it's unbelievable so we got to have a hundred percent um sober requirement for any kind of state services on homelessness the third part is mental health where honestly going back to the jails conversation you talk to sheriffs around the state they the number varies but they say 50 i've heard as high as 70 percent of the people in their jails have severe mental health problems that's where we're actually treating people with mental health problems either they're on the street or they're in jail is totally barbaric and one of the reasons is that we when you're talking about the homeless population obviously low income people so it's very much entwined when you talk about mental health care with medicaid with a federal system and there's a rule in medicaid that was set up right at the beginning when it was founded in the mid 60s called the imd rule institutions of mental disease and this was a time when they didn't want large mental asylums and whatever the idea was you have small facilities in the community so the rule is there is no medicaid reimbursement to the states for any mental health care provided in a facility with more than 16 beds it's a 16 bed rule of course that makes the whole thing incredibly uneconomic and inefficient imagine if hospitals could only be 16 beds how inefficient that would be the first trump administration created a waiver the imd waiver the states could apply for so you could get you know get around the rule california a lot of other states have taken that up california hasn't there's plenty of money in the system like we've been saying the budgets are there they've just been diverted into the wrong places so the third part of the plan is to take the money that's currently going into the homeless industrial complex these ridiculous apartment units for people who should be either getting mental health care or recovery treatment

SPEAKER_106: take that money and put it into modern large-scale mental health facilities and then we can and when

SPEAKER_133: you do your fraud work that's a great place for you to put a magnifying glass because that's where

David Friedberg: there's massive amounts of corruption cannot believe how much we spend in this or we spend in california on homeless and if you pay for something you will get more of it and they're

SPEAKER_103: getting a lot more of it steve as we wrap up give us the quarterback view of your path to victory

SPEAKER_11: walk us through the sequence of events the key moments leading up to the primary vote and then from primary to election day what has to happen for you to get to sacramento so we have the top two

SPEAKER_18: system um for those who i mean another crazy california thing where you end up with two candidates going through to the general election regardless of party the idea of this was to have more moderate politics ever since it was introduced the state's gone further and further to the left um and so you've got various scenarios that are possible right now i'm leading in all of the polls um on the republican side there's one other candidate i think with the president with president trump's endorsement of my campaign i think we can expect um i'm pretty confident that we can make it into the top two it's not certain we we've got to you know fight very hard over the next month or so the ballots go out next week early may um but i think that we're going to have a top two with myself and one other democrat and right now it looks as if it's going to be one of tom styer katie porter or javier becerra and all of those three represent either no change from what we have now or a move even further to the left in the wrong direction so i think broadly the argument is going to be very straightforward which is are you happy with the way things are going in california do you want more of it and if you do vote democrat or do you think we need a change so that's it's a classic you know change versus more of the same election getting into the the numbers it's i know a lot of people look at california and say it's impossible for a republican to win and jason was pointing out we've had republicans in the past but that was you know a long time ago and you could say special circumstances because arnold schwarzenegger was elected in a recall

SPEAKER_82: election and so on and he was a celebrity who was highly and loves in los angeles half the state exactly all of those things are true but and so i've always said from the beginning of this that

SPEAKER_18: it's not going to be easy to win it's going to be very difficult because of the structural factors in california but it's not impossible and given the seriousness of our predicament and how much i think the whole country depends on a successful growing thriving leading california then we should go for it because getting things back in a common sense direction is just a really important thing i would say california means to america what america means to the world and so this matters if you look at the numbers on the on the some people look at their voter registration numbers and they say democrats outnumber republicans two to one and that is true but when you look at actual voting the gap is a little bit closer over the last 20 years where you haven't had republicans elected the the pretty much the average republican vote has been just over 40 percent so it's been like a 60 40 split obviously that's not close but the gap is perhaps not as wide as some people might think but then you look at a couple of factors that i really think are different this year first of all there's a dissatisfaction with the way things are going that wasn't there before if you look at that basic number is the state on the right track wrong track in the even four years ago in the last governor's race the wrong track number was going to mid to high 40s now it's mid to high 50s so there's a majority for change in california just put it that way which is a good environment to be going into as a candidate representing change the second point is if you look at the actual votes you're going to need to win this is a midterm election 2026 if you try and get some kind of sense of how many votes will be cast in the midterm election this year take the average of the last two 2018 2022 you get a total of 11.7 million total votes as an estimate so to win you're going to need just over half of that call it 5.9 million now when people say there aren't enough republicans in california to win in 2024 in the presidential race president trump in california without even campaigning here or spending money on ads or anything it wasn't a targeted state got 6.1 million votes in other words there's more than enough people have just voted republican for president trump now of course you're not going to get a hundred percent of a presidential year turnout in the midterm election but the reason i make that point is that the votes are there actually even with just republicans now i don't think we're going to get there just with republican votes but that's the starting point is a strong campaign to turn out republican votes and a big driver for that this year that again is a unique feature this year is the fact that in november we're going to have voter id on the ballot that just qualified for the ballot and republicans particularly are enthusiastic about voter ideas i'm going to help us get a big turnout and then in terms of the coalition for victory i think that you've got a real opportunity to put together the kind of multi-racial working class coalition that president trump put together because it's but as going right back to where we started it's working class people who are really really

SPEAKER_91: struggling and being hammered the most by these policies they get to vote directly for no taxes

SPEAKER_64: no state income taxes exactly because that's my tax plan i just put this out there just the other

SPEAKER_18: day which is no and and no tax on tips that's the other part i mean which has been implemented at the federal level but california won't do it at the state level just my whole plan is geared to a three dollar gas i call it cal affordable three dollar gas cut your electric bills in half your first hundred grand tax free a home you can afford to buy really simple practical common sense things that particularly help the people who've been hurt the most over the last few years and i think that's

SPEAKER_11: how we pull this off steve on behalf of all in i just want to say thank you for being so incredibly candid and open with us we're wishing you the best of luck thank you so much and just from my seat

SPEAKER_20: if if jason's moving back no i mean if you want it just i left for a reason and part of it was the

David Friedberg: dysfunction of the state and if you want things to continue i think you know having an unbalanced government that's all in one party is a way to do that you got to try to find some balance here and i think why not give it a shot if you're in california you have nothing to lose the state is in a

SPEAKER_71: massively dysfunctional situation so i wish you great luck steve hilton thank you guys great to be with you all right cheers now