SPEAKER_00: all right everybody welcome back to the all in podcast the number one podcast in the world you got what you wanted folks the original quartet is here live from dc with a great shirt is that is

SPEAKER_01: your haberdasher making that shirt or is that a tom ford that white shirt is so crisp so perfect

SPEAKER_03: david sacks you're talking about me you're czar you're sorry i'll tell you exactly what it is

SPEAKER_04: i'll tell you what it is you can tell me if it's right brioni yes of course brioni

SPEAKER_05: being brioni spread car look at that how many years have i spent being rich when a man turns 50

SPEAKER_08: the only thing you should wear is brioni the stitching is looks very luxurious that's how chamath knew right chamath how did you figure it out the stitching it's just how it lays with the

SPEAKER_12: collar to be honest with you it's the button catch the brioni has a very specific style of button catches if you don't know what that means is because you're ignorant malcontent yourself i'm

SPEAKER_22: looking it up right now right yeah all right everybody the all in summit is going into its

SPEAKER_26: fourth year september 7th through 9th and the goal is of course to have the world's most important

SPEAKER_28: conversations go to allin.com slash yada yada yada to join us at the summit all right uh it's a lot in

SPEAKER_01: the docket but there's kind of a very unique thing going on in the world david everybody knows about ai

SPEAKER_32: doomerism basically people who are concerned uh rightfully so that ai could have some you know significant impacts on the world dario amode said he could see employment spike to 10 to 20 percent in the next couple years the four percent now as we've always talked about here he told access that ai companies and government needs to stop sugarcoating what's coming he expects a mass elimination of jobs across tech finance legal and consulting okay that's a debate we've had here and entry level workers will be hit the hardest he wants lawmakers to take action and more ceos to speak out polymarket things regulatory capture via this ai safety bill is very unlikely the u.s enacts ai safety bill in 2025 currently stands at a 13 chance but uh sac you wanted to discuss this

SPEAKER_01: because it seems like there is more at work than just a couple of technologists with i think we'd all agree there are legitimate concerns about job destruction or job and employment displacement that could occur with ai we all agree on that we're seeing robo taxis start to hit the streets and i don't think anybody believes that being a cab driver is going to exist as a job 10 years from now so there seems to be something here about ai doomerism but it's being taken to a different level

SPEAKER_33: by a group of people maybe uh with a different agenda yeah well first of all let's just acknowledge

SPEAKER_35: that there are concerns and risks associated with ai it is a profound and transformative technology

SPEAKER_36: and there are legitimate concerns about where am i lead i mean the future is unknown and that can be kind of scary now that being said i think that when somebody makes a pronouncement that says something like 50 percent of white collar jobs are going to be lost within two years that's a level of specificity that i think is just unknowable and is more associated with an attempt to grab headlines and to be frank if you go back and look at anthropic's announcement or dario's announcement there is a pattern of trying to grab headlines by making the most sensationalist version

SPEAKER_37: of what could be a legitimate concern if you go back three years ago they created this concern that ai models could be used to create bioweapons and they showed what was supposedly a sample i think of claude generating an output that could be used by a bioterrorist or something like that and on the basis of that it actually got a lot of play and in the uk rishi sunak got very interested in this cause and that led to the first ai safety summit at bletchley park so that sort of concern really drove some of the initial ai safety concerns but it turns out that that particular output was discredited it wasn't true i'm not saying that ai couldn't be used or misused to maybe create a bioweapon one day but it was not an imminent threat in the way that it was portrayed there have been other examples of this you know obviously people are concerned about could the ai develop into a super intelligence that grows beyond our control could it lead to widespread job loss i mean these are legitimate things to worry about but i think these concerns are being hyped up to a level that there's simply no evidence for and the question is why and i think that there is an agenda here that people

SPEAKER_39: should be concerned about so let's start with maybe freeberg things that we all agree on here there are

SPEAKER_01: millions of people who drive trucks and ubers and lifts and door dashes you would i think agree the majority of that work in but five to ten years just to put a number on it will be done by self-driving

SPEAKER_40: robots cars etc trucks yeah dave i think it's that might be the wrong way to look at it or i wouldn't look at it that way and maybe i'll just frame it a different way please if i'm deploying capital let's

SPEAKER_43: say i'm a ceo of a company and i can now have software that's written by ai does that mean that i'm

SPEAKER_44: going to fire 80 percent of my software engineers basically it means one software engineer can output call it 20 50 times as much software as they previously could by using that software generation tool so the return on the invested capital the money i'm spending to pay the salary of that software engineer is now much much higher i'm getting much more out of that person because of the unlocking of

SPEAKER_43: the productivity because of the ai tool that i previously could so when you have a higher roi on deployed capital do you deploy more capital or less capital suddenly you have this opportunity

SPEAKER_44: to make 20 times on your money versus two times on your money if you have a chance to make 20 times on your money you're going to deploy a lot more capital and this is the story of technology going back to the first invention of the first technology of the caveman when we have this ability to create leverage humans have a tendency to do more and invest more not less and i think that's what's about to happen

SPEAKER_43: i think we see this across the spectrum people assumed oh my gosh software can now be written with one person you can create a whole startup you don't need to have venture capital anymore in fact what i think we're going to see is much more venture capital flowing into new tech startups much more capital being deployed because the return on the invested capital is so so so much higher

SPEAKER_44: because of ai so generally speaking i think that the the premise that ai destroys jobs is wrong because it doesn't take into account the significantly higher return on invested capital which means more capital is going to be deployed which means actually far more jobs are going to be created far more work is going to get done and so i think that the counterbalancing effect is really hard to see without taking that zoomed out perspective to to respond to sax's point i do think anytime you see a major change socially societally there's a vacuum how's the system going to operate in the future and anytime there's a vacuum in the system a bunch of people will rush in and say i know how to fill that vacuum i know what to do because i am smarter more educated more experienced more knowledgeable more moral i have some superiority over everyone else and therefore i should be in a position to define how the new system should operate and so there's a natural kind of power vacuum that emerges anytime there's a major transition like this and there will be a scrambling and a fighting and a whole bunch of different representation typically fear is a great way of getting into power and people are going to try and create new control systems because of the transition that's

SPEAKER_50: underway okay around the world yeah i mean uh so chamath it's pretty clear you know freeberg didn't

SPEAKER_01: answer this question specifically so i'm going to give it to you again you would agree jobs like driving things are going to go away if we had to pick a number somewhere between five and ten years the majority of those would go away he's positioning hey a lot more jobs will be created because there'll be all these extra venture capital and opportunities etc but job displacement will be very real and we're seeing i think job displacement now you had a tweet recently you know you were

SPEAKER_51: talking about entry-level jobs and how that seems to be going away in the white-collar space so where do you land on job displacement freeberg's already kind of given the big picture here but let's step back to for people who are listening who have relatives who drive uber or a truck or are graduating from college and want to go work at a you know i don't know the magnificent seven or in tech and they're not hiring and we know the reason they're not hiring because they're leaning into ai so let's talk about the job displacement in the medium term i'm going to ignore your question

SPEAKER_53: great why should you be any different than the other malcontents on this podcast

SPEAKER_54: there's two people not wanting to answer the question about job displacement interesting trend

SPEAKER_12: no no we'll go back to that let me start by just saying that it seems that these safety warnings tend to be pretty coincidental with key fundraising moments in anthropics journey so let's just start with that and if you put that into an llm and try to figure out if what i just said was true it's interesting but you find it's relatively accurate i think that there is a very smart

SPEAKER_59: business strategy here and i've said a version of this about the other companies at the foundational model layer that aren't meta and google because meta and google frankly sit on these money gushers where they just generate so much capital that they can fund these things to infinity but if you're not them so if you're open ai or if you're anthropic you have to find an angle and i think the angles are slightly different for both but i think what this suggests is that there's a pattern that exists and i think that that explains some of the framing of what we see in the press jason and why we get

SPEAKER_50: these exaggerated claims perfect so there are people who are doing this for nefarious reasons is i guess where you're sort of getting at here it's a way to it's not it's smart it's smart it's

SPEAKER_01: smart if you fall smart it's up to you yeah okay well there's also an industrial complex according to some folks that are backing this if you've heard of effective altruism that was like this movement of a bunch of i don't know i guess they consider themselves intellectual sacks and they uh were kind of

SPEAKER_32: backing a large swath of organizations that i guess we would call in the industry astroturfing or what do they call it when you make so many of these organizations that they're not real in

SPEAKER_51: politics and flooding the zone perhaps so if you were to look at this article here nick i think you have the ai existential risk um industrial complex graphic there it seems like a group of people

SPEAKER_01: according to this article have backed to the tune of 1.6 billion a large number of organizations to scare the bejesus out of everybody and make youtube videos tick tocks and they've they've made a map of

SPEAKER_35: it there's some key takeaways here from that article where it says here that it's an inflated ecosystem

SPEAKER_36: there's a great deal of redundancy same names acronyms logos with only minor changes same extreme talking points same group of people just with different titles same funding source there's a funding source called open philanthropy which was funded by dustin moskovitz who is one of the facebook billionaires chamath you worked with him right i mean he was wasn't he like zuck's roommate at harvard or something and one of the first engineers made a lot of money so he he's an ea and he funded this group called open philanthropy which then has become the feeder for essentially all these other organizations which are almost different fronts to basically the same underlying ea ideology and what's interesting is that the guy who set this up for dustin holden karnofsky who is a major effective altruist was doling out all the money he's married to dario's sister and she she's i guess associated with ea and she was one of the co-founders of anthropic so these are not coincidences i mean the reality is there's a very specific ideological and political agenda here now what is that

SPEAKER_72: agenda it's basically global ai governance if you will they want ai to be highly regulated but not

SPEAKER_36: just at the level of the nation state but let's say internationally super nationally to what end well if you just do a quick search on global compute governance it'll tell you what the key aspects are so number one they want regulation of computational resources this includes access to gpus they want ai safety and security regulation they want international you call them globalist agreements and they want ethical and societal considerations or policy built into this now what does that sound

SPEAKER_72: like that sounds a lot to me like what the biden administration was pursuing specifically we had that biden executive order on ai which was 100 pages of burnsome regulation that was designed to promote ai safety but had all these dei requirements so you know it led to woke ai you remember when google launched black george washington and so forth they had the biden diffusion rule which created this global licensing framework to sell gpus all over the world so extreme restrictions on proliferation of servers of computing power they created what's called the ai safety institute and they again fostered these international ai summits so if you actually look at what the biden administration was tangibly doing in terms of policy and you look at what ea's agenda is with respect to global compute governance they were pushing hard on these fronts and now if you look at the level of personnel there are very very powerful biden staffers who now all work in anthropic so probably the most powerful biden staffer on ai

SPEAKER_36: over the past four years was a lawyer named tarun chabra and he now works at anthropic for dario elizabeth kelly who was the founding director of the ai safety institute in the government now works at anthropic like i mentioned dario's sister is married to holden karnofsky who doles out all the money to these ea organizations so if you were to do something like create a network map you would see very quickly that there's three key nodes here there's the effective altruist movement of which sam bankman freed is the most notable member but which i think dustin mosfitz is now the main funder there's the biden administration and like the key staffers and then you've got anthropic and it's

SPEAKER_76: a very tightly wound network now why does this matter yeah because also the goals i think is yes

David Sacks: well the goal like i said is is global compute governance is basically establishing national and then international regulations of ai now but they would claim let's just pause here for a minute

SPEAKER_01: they would claim the reason they're doing it and so we'll we'll save if we believe this or not but they are concerned about job destruction in the short term they're also concerned as science fiction

SPEAKER_32: as it is that the ai when we get to like a sort of generalized super intelligence is going to kill humanity that this is a non-zero chance elon has said this before they've sort of taken it to a almost like a certainty yes we're going to have so many of these general intelligences they only

SPEAKER_07: believe that when they're raising money well that's what i'm sort of getting at like so i think they believe it all the time but maybe maybe the press releases are time for for the fund yes they're building but let me let me answer that right yeah yeah look i mean it is a great

SPEAKER_36: product cloud kicks us i'm more interested in the political dimension of this i'm not bashing a

SPEAKER_72: specific product or company but look i think that there is some non-zero risk of ai growing into a super intelligence that's beyond our control they have a name for that they call it x-risk or existential risk i think it's very hard to put a percentage on that i'm willing to acknowledge that is a risk you know i think about that all the time and i do think we should be concerned about it but there's two problems i think with this approach number one is x-risk is not the only kind of risk i would say that china winning the ai race is a huge risk i don't really want to see a ccp ai running the world and if you hobble our own innovation our own ai efforts in the name of stomping out every possibility of x-risk then you probably end up losing the ai race to china because they're not going to abide by those same regulations so again you can't optimize for solving only one risk while ignoring all the others and i would say the risk of china winning the ai race is you know it might be like 30 percent whereas i think x-risk is probably a much lower percentage so there are there there are other risks to to worry about and i i do think that they are single-mindedly focused on scaring people with some of these headlines around first it was the bioweapons then it was the super intelligence now it's the job loss and i think it's a tried and true tactic of people who want to give more power to the government to scare the population right because if you can scare the population and make them fearful then they will cry out for the government to solve the problem and that's what i see here is that you've got this elaborate network of front organizations which are all motivated by this ea ideology they're funded by a hardcore leftist and by the way i became aware of dustin's politics because of the chase of budine recall i found out that he was a big funder of chase of budine remember this yeah yes and most of us and carrie tuna his wife also reed hastings just joined the board of of anthropic remember when he back in 2016 to try to drive peter thiel off of the board of facebook for supporting trump so you know these are like committed leftists they're trump haters but the point is that these are people who fundamentally believe in empowering government to the maximum extent more government and empowering government to the maximum extent now my problem with that is i actually think that probably the single greatest dystopian risk associated with ai is the risk that government uses it to control all of us to me like you end up in some sort of orwellian future where ai is controlled by the government and out of all the risks we've talked about that's the only one for which i've seen tangible evidence so in other words if you go back to last year when we had the whole woke ai there was plenty of evidence that the people who were creating these products were infusing their left wing or woke values into the product to the point where it was lying to all of us when it was rewriting history and there was plenty of evidence that the biden eo was trying to enshrine that idea was basically trying to require dei be infused into ai models and it wanted to anoint two or three winners in this ai race so i'm quite convinced that prior to donald trump winning the election we were on a path of global compute governance where two or three big ai companies were going to be anointed as the winners and the quid pro quo is that they were going to infuse those ai models with woke values and there was plenty of evidence for that you look at the policies you look at the models this was not a theoretical concern this was real and i think the only reason why we've moved off of that trajectory

SPEAKER_91: is because of trump's election but we could very easily be moved back onto that trajectory

SPEAKER_93: if you were to look at all three opinions here and put them together they could all be true at

SPEAKER_32: the same time you've got a number of people some might call useful idiots some might call just you know people with god complexes who believe they know how the world should operate effective altruism kind of falls into that oh we can make a formula that that's their kind of idea where we can tell you where to put your money rich people in order to create the most good and you know where are these enlightened individuals with the best view of the world they might be who knows maybe they're the smartest kids in the room but they're kind of delusional the second piece i'll do here is i think you're absolutely correct jamath that there are people who have economic interests who are then using those useful idiots and or delusional people with god complexes to serve their need which is to be one of the three winners and then sac in inherent to all of that is they have a political ideology so why not use these people with delusions of grandeur in order to secure the bag for their companies for their investments and secure their candidates into office so that they can block further people from getting h-100 because they literally want to by the way that's the part

SPEAKER_59: that's very smart about what they're doing because you know it's not like they're illiquid they're full of liquidity in the sense that you're bringing in people that are very technically capable and you're setting up these funding rounds where a large portion goes right back out the door via secondaries and so there's all these people that are making money having this worldview and so to your point jason it's going to cement that worldview and then they are going to propagate it even more aggressively into the world so i think the threshold question is should you fear government over-regulation or should you fear autocomplete and i would say you should not be so afraid of the autocomplete right now it may get so good that it's an agi but right now it's an exceptionally good

SPEAKER_35: autocomplete yeah i just think that again it's a tried and true tactic of people who want to give immeasurably more power to the government to try and make people afraid and they stampede people into these policies right and that gives them power exactly now why do i think this is important to talk about on last week's show i talked about the trip to the middle east and how we started doing

SPEAKER_36: these ai acceleration partnerships with the gulf states who have a lot of resources a lot of money and they're intensely interested in ai and the biden administration was pushing them away it basically

SPEAKER_72: said you can't have the chips you can't build data centers and it was pushing them into the arms of china the thing that i thought was so bizarre is that the various groups and organizations and former biden staffers wrote this policy have been agitating in washington and they've been trying to portray themselves as china hawks and i'm like wait this doesn't make any sense because this policy again there's there's basically two camps in this new cold war it's us versus china you can pull the gulf states into our orbit or you can drive them into china's orbit so this to me just didn't make any sense and what's happened is that frankly you've got this ea ideology that's really motivating things which is a desire to lock down compute right they're afraid of proliferation they're afraid of diffusion that's really their motivation and they're trying to rebrand themselves as china hawks because they know that in the trump administration that idea is just not going to get much

SPEAKER_101: purchase right and your position as czar is a level playing field people compete and the good guys

SPEAKER_51: you know the west should be supported to hit artificial general intelligence as fast as possible so the bad guys china don't get it first that that's a well open competition i don't know if i

SPEAKER_36: would frame it around agi specifically but what i would say is that look i think our policy should be to win the ai race because the alternative is that china wins it and that would be very bad for our economy and our military how do you win the ai race you got to out innovate you got to have

SPEAKER_72: innovation that means we can't have over regulation red tape we got to build out the most ai infrastructure data centers energy which includes our partners and then third i think it means ai diplomacy because we want to build out the biggest ecosystem we know that biggest app store wins biggest ecosystem wins right and the policies under the by administration we're doing the opposite of all those things but again you have to go back to what was driving that and it was not driven by this china hawk mentality that is now a convenient rebranding it was driven by this ea ideology this doomerism and so this is what i'm talking about is i want to expose it because i think a lot of people on the republican side don't realize where the ideology is really coming from and who's funding it they're

SPEAKER_86: obviously trump haters and they need to be lumered quite frankly

SPEAKER_107: they do they need to be lumered i mean you know freeberg i want to come back around again because i

SPEAKER_32: respect your opinion on you know how close we are to turning certain corners especially in science so i understand big picture you believe that the opportunity will be there hey we got people out of fields you know in the agricultural revolution we put them into factories industrial revolution then we went to this information revolution so your position is we will have a similar transition and it'll be okay but do you not believe that the speed because we've talked about this privately and publicly on the pod that this speed the velocity at which these changes are occurring you would agree are faster than the industrial revolution much faster than the information revolution so let's one more time talk about job displacement and i think the real concern here for a group of people who are buying into this ideology is specifically unions job displacement this is something the eu cares about this is something the biden administration cares about if truck drivers lose their jobs just like we went to bat previously uh for coal miners and there were only 75 000 or 150 000 in the country at the time but it became the national dialogue oh my god the the coal miners how fast is this going to happen one more time on drivers specifically okay coders you think there'll be more code to write but driving there's not going to be more driving to be done so is this time different in terms of the velocity of the chain and the job displacement in your mind friedberg

SPEAKER_43: the velocity is greater but the benefit will be faster so the benefit of the industrial revolution

SPEAKER_44: which ultimately drove lower price products and broader availability of products through manufacturing was one of the key outputs of that revolution meaning that we created a consumer market that largely

SPEAKER_43: didn't exist prior remember prior to the industrial revolution if you wanted to buy a table or some

SPEAKER_44: clothes they were handmade they were kind of artisanal suddenly the industrial revolution unlocked the ability to mass produce things in factories and that dropped the cost and the availability and the abundance of things that everyone wanted to have access to but they otherwise wouldn't have been able to afford so suddenly everyone could go and buy blankets and clothes and canned food and all of these incredible things that started to come out of this industrial revolution that happened at the time and i think that folks are underestimating and under realizing the benefits at this stage of what's going to come out of the ai revolution and how it's ultimately going to benefit people's availability of products cost of goods access to things so the counterbalancing force jcal is deflationary which is um let's assume that the cost of everything comes down by half that's a huge

SPEAKER_43: relief on people's need to work 60 hours a week suddenly you only need to work 30 hours a week and you can have the same lifestyle or perhaps even a better lifestyle than you have today so the counter argument to your point and i'll talk about the pace of change and specific jobs in a moment but the

SPEAKER_44: counter argument to your point is that there's going to be this cost reduction and abundance that

SPEAKER_43: doesn't exist today give an example let's give like some examples that we could see automation and

SPEAKER_44: food prep so we're seeing a lot of restaurants install robotic systems to make food and people are

SPEAKER_43: like oh job loss job loss but let me just give you the counter side the counter side is that the cost of

SPEAKER_44: your food drops in half so suddenly you know all the labor costs it's built into making the stuff you want to pick up everyone's freaking out right now about inflation oh my god it's eight dollars for a cup of coffee it's eight dollars for a latte this is crazy crazy crazy what if that dropped down to two bucks you're going to be like man this is pretty awesome with good service and good experience and don't make it all dystopian but suddenly there's going to be this like incredible reduction or deflationary effect in the cost of food and we're already starting to see automation play its way in the food system to bring inflation down and that's very powerful for people shout out to

SPEAKER_110: itza cloud kitchens and cafe x we all took swings at the bat at that exact concept is that it could be done better cheaper faster one of the amazing things of these vision action models that are now

SPEAKER_44: being employed is you can rapidly learn using vision systems and then deploy automation systems in those sorts of environments where you have a lot of kind of repetitive tasks that the system can be trained and installed in a matter of weeks and historically that would have been a whole startup that would have taken years to figure out how to get all these things together and custom programming custom coded so the flip side is like when uber hit those people were not drivers think

SPEAKER_43: about the jobs that all those people had prior to uber coming to market and then the reason they drove for uber is they could make more money driving for uber or now driving flexibility or doordash and the flexibility so their lifestyle got better they had all of this more control in their life their incomes went up and so there's a series of things that you are correct won't make sense in the future from a kind of standard of work perspective but the right way to think about it is opportunity gets created new jobs emerge new industry new income costs go down and so i keep harping on this that it's really hard today to be very prescriptive to sax's point about what exactly is around the corner but it is an almost certainty that what is around the corner is more capital will be deployed that means the economy grows that means there's a faster deployment of growth of new jobs new opportunities for people to make more money to be happier in the work that they do and the flip side being things are going to get cheaper so i mean we're waxing philosophical here but i think it's really key because you can focus on the one side of the coin and miss the whole other and that's

SPEAKER_113: what a lot of journalists and one door commentators and fear mongers do is they miss that other side

SPEAKER_35: got it well said freeberg well said i think i've heard satya turned this question around about job loss saying well do you believe that gdp is going to grow by 10 a year because what are we talking

SPEAKER_36: about here in order to have the kind of disruption that you're talking about where i don't know 10 to 20 percent of knowledge workers end up losing their jobs ai is going to be such a profound force

SPEAKER_72: that it's going to have to create gdp growth like we've never seen before that's right so it's easier for people to say oh well 20 people are going to lose their jobs but wait are we're talking about

SPEAKER_07: a world and where the economy is growing 10 every year like do you actually believe that's more

SPEAKER_43: income that's more income for everyone that's new jobs being created it's an inevitability we've seen this in every revolution you know prior to the industrial revolution 60 of americans worked in agriculture and when the tractor came around and factories came around those folks got to get out of doing manual labor in the fields where they were literally you know tilling the fields by hand and they got to go work in a factory where they didn't have to do manual labor to move things yeah they did things in the factory with their hands but it wasn't about grunt work in the field all day in the sun and it became a better standard of living it became a job and today it became a five-day work week it went from a seven day six or seven day work to five hundred hours a week to 45 50 hours a week and now i think the next phase is we're going to end up in less than 30 hours a week with people making more money and having more abundance for every dollar that they earn with respect to what they can purchase and the lives they can live that means more time with your family more time with your

SPEAKER_44: friends more time to explore interesting opportunities so you know we've been through this conversation a number of times i i know i'm not no it's important to bring it up i think and really unpack it because

SPEAKER_32: the fear is peaking now sax people are using this moment in time to scare people that hey the jobs are going to go away and they won't come back but what we're seeing on the ground sax is i'm seeing many more startups getting created and able to accomplish more tasks and hit a higher revenue per employee than they did in the last two cycles so it used to be you know you try to get to a quarter million in revenue per employee than 500. now we're regularly seeing startups hit a million dollars in revenue per employee something that was rarefied air previously which then speaks to your point freeberg that there'll be more abundance there'll be more capital generated more more capital deployed

SPEAKER_127: more capital deployed for more opportunities but you're going to need to be more resilient i think yeah

SPEAKER_35: i think it's actually very hard to completely eliminate a human job the the ones that you cited

SPEAKER_36: and jacob you keep citing the same ones because i actually don't think there's that many that fit in this category the drivers and maybe level one customer support because those jobs are so monolithic

SPEAKER_72: but when you think about even like what a salesperson does right it's like yes they spend

SPEAKER_36: a lot of time with prospects but they also spend time negotiating contracts and they spend time doing

SPEAKER_72: post-sale implementation and follow-up and they spend time learning the product and giving feedback i mean it's a multi-faceted job and you can use ai to automate pieces of it but to eliminate the whole job is actually very hard and so i just think this idea that boom 20 of the workforce is going to be unemployed in two years i just don't think that it's going to work that way but look if there is widespread job disruption then obviously the government's going to react and we're going to be in a very different societal order but my point is you want the government to start reacting now before this

SPEAKER_130: is actually yeah we don't need to be precogs and predict it yeah it's a total power grab it's a total

SPEAKER_72: power grab to give the government and these organizations more power before the risk has even manifested and let me say this as well with respect to all these regulations that were created the 100 page by neo and the 200 page diffusion rule none of these regulations solve the x-risk problem none of these things actually would prevent the most existential risks that we're talking about

SPEAKER_65: for alignment they don't sign for us the kill switch yeah when someone actually figures out

SPEAKER_72: how to solve that problem i'm all ears you know look i'm not cavalier about these risks i understand that they exist but i'm not in favor of the fear-mongering i'm not in favor of giving all this power to the government before you even know how to solve these problems chamath you did a tweet

SPEAKER_50: about entry-level jobs being toast so i think there is a nuance here and both parties could be correct

SPEAKER_32: i think the job destruction is happening as we speak i'll just give one example and then drop to you chamath one job in startups that's not driving a car or you know super entry level was people would hire consultants to do recruitment and to write job descriptions now i was at a general last night talking to a bunch of founders here in singapore and i said how many people have used ai to write a job description everybody's hand went up i said how many of you with that job description was that job description better than you could have written or any consultant they they all said yes 100 ai is better at that job that was a job a high level hr recruitment job or an aspect of its act so that was half the job a third of the job to your point the chores are being automated so i do think we're going to see entry-level jobs chamath the ones that get people into an organization maybe they're going away and that was that your point of your tweet which we'll pull up right here if a gpt is a glorified

SPEAKER_59: autocomplete how did we used to do glorified autocomplete in the past it was with new grads new grads were our autocomplete and to your point the models are good enough that it effectively allows a person to rise in their career without the need of new grad grist for the mill so to speak so i think the reason why companies aren't hiring nearly as many new grads is that the the folks that are already in a company can do more work with these tools and i think that that's a very good thing so you're generally going to see opex as a percentage of revenue shrink naturally and you're going to generally see revenue per employee go up naturally but it's going to create a tough job market for new grads in the established organizations and so what should new grads do they should probably steep

SPEAKER_136: themselves in the tools and go to younger companies or start a company i think that's the only

SPEAKER_35: solution for them bingo the most important thing for whether there are jobs available for new grads

SPEAKER_36: or not is whether the economy is booming so obviously in the wake of a financial crisis the jobs dry up because everyone's cost cutting and those jobs are the first ones to get cut but if the economy is booming then there's going to be a lot more job creation and so again if ai is this driver and enabler of tremendous productivity that's going to be good for economic growth and i think that that will lead to more company formation more company expansion at the same time that you're

SPEAKER_72: getting more productivity now to give an example one of the things i see a lot discussed online about these coding assistants is that they make junior programmers much better because you know if you're already like a 10x programmer very experienced you already knew how to do everything and you could argue that the people who benefit the most are the entry-level coders who are willing to now embrace the new technology and it makes them much more productive so in other words it's a huge leveler and it takes an entry-level coder and makes them 5x or 10x better so look this is an argument i see online the point is just i don't think we know how this cuts yet i agree and i just think there's like this this dumerism is premature and it's not a coincidence that it's being funded and motivated

SPEAKER_59: by this hardcore ideological element i'll tell you my hiring experience we have about 30 people at 80 90 and the way that i found it to work the best is you have senior people act as mentors and then you have an overwhelming corpus of young very talented people who are ai native and if you don't find that mix what you have instead are l7s from google and amazon and meta who come to you with extremely high salary demands and stock demands and they just don't thrive and part of why they don't thrive is that they push back on the tools and how you use them they push back on all these things that the tools help you get to faster this is why i think it's so important for young folks to just jump in with two feet and be ai native from the jump because you're much more hireable frankly to the to the emergent company and the bigger companies you'll have a lot of these folks that see the writing on the wall may not want to adapt as fast as otherwise another way for example that you can measure this is if you look inside your company on the productivity lift of some of these coding assistants for people as a distribution of age what you'll see is the younger people leverage it way more and have way more productivity than older folks and i'm not saying that as an ageist comment i'm saying that it's an actual reflection of how people are reacting to these tools what you're describing is a paradigm shift it is a big leap is you know it's like when i went to college when i took computer science it was object-oriented programming it was like c plus plus it was compiled languages it was gnarly it was nasty work and then you had these high level abstracted languages and i used to remember at facebook i would just get so annoyed because i was like why is everybody using php and python this is like not even real but i was one of these old light lights who didn't understand that i just had to take the leap and what it did was it grew the top of the funnel of the number of developers by 10x and as a result what you had were all of these advancements for the internet and i think what's happening right now is akin to the same thing where you're going to grow the number of developers upstream by 10x but in order to embrace that you just have to jump in with two feet and if you're very rigid in how you think the job should be done technically i think you're just going to get left

SPEAKER_145: behind just a little interesting statistic there microsoft announced 6 000 job layoffs about three

SPEAKER_51: percent of their workforce while putting up record profits while being an incredible cash position

SPEAKER_35: confirmation bias it's like now every time there's a layoff announcement people try to tie it to ai to feed this doomer story i don't think that's an ai story i well

SPEAKER_32: actually i think i don't think it's an ai story i think it is because the people they're eliminating our management and i think the the management layer becomes less necessary it was entry-level employees

SPEAKER_71: now you're saying it's management this is total confirmation bias no no i think those are two

SPEAKER_153: areas that specifically get eliminated entry level it's too hard it's too hard to give them the grunt work and then for the managers who are it's not it's not been there for 20 years hold on let me finish

SPEAKER_32: though for those people i think they are unnecessary in this new ai monitoring world where what are you

SPEAKER_35: talking about what is the ai agent that's doing management right now in companies

SPEAKER_157: oh this theory doesn't even make sense oh no it totally does there are tools now that are telling

SPEAKER_32: you this is these are the most productive people in the organization from office outline who's shipping the most etc who's using the tools and then people are saying well why do we have all these highly priced people who are not actually shipping code who are l7s you're totally falling for some sort of

SPEAKER_36: narrative here this makes no sense i don't think i am yeah let me be very clear what i'm saying what

SPEAKER_59: i am saying is ai natives are extremely productive they use these tools they're very facile with them i think it's very reductive but what you see is the older or more established in your career you are in technical roles what i see is that it's harder and harder for folks like that to embrace these tools in the same way now how does it play out in terms of jobs i think that just these tools are good enough where the net new incremental task oriented role that would typically go to a new grad

SPEAKER_164: a lot of that can be defrayed by these models that's what i'm saying very clear specifically and i don't think that speaks to management i agree with sacks it has nothing to do with sergey

SPEAKER_153: said freeberg when he came to uh our f1 that management will be the first thing to go i was

SPEAKER_32: talking to some entrepreneurs last night again here in singapore and they are taking all the github

SPEAKER_50: and jira cards and things that have been submitted plus all the slack messages in their organization and they're putting them into an llm and having it write management reports of who is the most productive in the organization and in the new version of windows it's monitoring your entire desktop

SPEAKER_32: freeberg management is going to know who in the organization is actually doing work what work they're doing and what the uh result of that work is through ai that is the future of management and you take out all bias all you know loyalty and the ai is going to do that i couldn't disagree with you more uh sacks on that but freeberg you wanted to wrap that wasn't my point my point is that

SPEAKER_07: ai the managers are not losing their job because ai is replacing them i didn't say that ai wouldn't be a

SPEAKER_72: valuable tool for managers to use sure ai will be a great tool for managers but we're not anywhere near the point where managerial jobs are being eliminated because they're getting replaced by ai

SPEAKER_171: agents we're still at the chatbot stage of this literally sergey said he took their internal slack

SPEAKER_50: went into like a dev conversation said who are the underrated people in this organization who deserve a

SPEAKER_173: raise and it gave him the right answer right that doesn't allow you to cut 6 000 people i think

SPEAKER_175: it's happening as we speak it's just not over you you fell for this narrative you grasped onto this

SPEAKER_86: microsoft restructuring where they eliminated 6 000 roles and you're trying to attribute that to ai now

SPEAKER_153: i think it has to do with ai i think management is looking at it saying we are going to replace these positions with ai we might as well get rid of them now it is in flux we'll see who's right in the coming months can i make another comment freeberg wrap us up here so we can get on to the next topic

SPEAKER_182: this is a great topic i want to make one last point which i think please and sax you may not

SPEAKER_44: appreciate this so we can have a healthy argument about this i think in the same way that all of this jobs are going to get lost to ai fear-mongering there's a similar narrative that i think is a false narrative around there's a race in ai that's underway between nation states and the reason i think it's false is if i asked you guys the question who won the industrial revolution the industrial revolution benefited everyone around the world there are factories and there's a continuous effort and continuous improvement in manufacturing processes worldwide that is a continuation of that revolution similar if i asked who won the internet race there are businesses built out of the us businesses built out of china businesses built out of india and europe that have all created value for shareholders created value for consumers change the world etc and i think the same is going to

SPEAKER_43: happen in ai i don't think that there's a finish line in ai i think ai is a new paradigm of work a new paradigm of productivity a new paradigm of business of the economy of livelihoods of pretty much everything

SPEAKER_44: every interaction humans have with ourselves and the world around us will have in its substrate ai and as a result i think it's going to be this continuous process of improvement so i'm not sure look there are different models and you can look at the performance metrics of models but you can get yourself spun up into a tizzy over which model is ahead of the others which one's going to quote get to the finish line first but i think at the end of the day the abundance and the economic prosperity that will arise from the continuous performance improvements that come out of ai and ai development will benefit all nation states and actually could lead to a little bit more of a less resource constrained world where we're all fighting over limited resources and there's nation state definitions around who has access to what and perhaps more abundance which means more peace and uh less of this kind of resource driven world sex your thought on the kumbaya theory exposed by

SPEAKER_35: freeberg yeah um i i'll partially agree in the sense that i don't think the ai race is a finite game

SPEAKER_07: it's an infinite game i agree that there's no finish line but that doesn't mean there's not a race going

SPEAKER_36: on so for example an arms race would be a classic example of a competition between countries to see who is stronger to basically a mass power and they might be neutralizing each other the balance of power may stay in equilibrium even though both sides feel the need to constantly up level their arms their power yeah and so i think that to use the the term that meersheimer used at the all-in summit we are in an iron cage the us and china are the two leading countries in the world economically militarily technologically they both care about their survival the best way to ensure your survival in a self-help world is by being the most powerful and so these are great powers who care a lot about the balance

SPEAKER_72: of power and they will compete vigorously with each other to maintain the greatest balance of power between them and high tech is a major dimension of that competition and within high tech ai is the most important field so look there is going to be an intense competition around ai now the question is how does that end up i mean it could end up in a tie or in it could end up in a situation where both countries benefit maybe open source wins maybe neither side gains a decisive advantage but they're absolutely going to compete because neither one can afford to take the risk that the other one will

SPEAKER_43: develop a decisive advantage person's dilemma nuclear proliferation is a good analogy i would argue nuclear deterrence led to a more peaceful world in the 20th century i mean is that fair to say sacks

SPEAKER_72: that ultimately what happened with nuclear is that the actual underlying technology hit you know an asymptote right it plateaued right and so we ended up in a situation where in the case of the united states versus soviet union where both sides had enough nukes to blow up the world many times over and there wasn't really that much more to innovate so you know the the the underlying technological competition had ended the the dynamic was more stable and they were able to reach an arms control framework to sort of control the arms race right i think ai is a little different we're in a situation right now where the technology is changing very very rapidly and it's potentially on some sort of exponential curve and so therefore being a year ahead even six months ahead could result in a major advantage i think under those conditions both sides are going to feel the need to compete

SPEAKER_185: very vigorously i don't think they can sign up this is a system of productivity right for an agreement

SPEAKER_43: to slow each other down nuclear was not a system of productivity it was not a system of economic growth it was a system of literally destruction and this is quite different this is a system of making more with less which unleashes benefits to everyone in a way that perhaps

SPEAKER_195: should be calming down the conflict you've got to admit that there's a there is a potential dual use

SPEAKER_72: here there's no question that right the armies of the future are going to be drones and robots and they're going to be ai powered yeah and as long as that's the case these countries are going to compete vigorously to have the best ai and they're going to want their leaders or national champions

SPEAKER_174: their stars and so forth to win the race what's the worst case sax if china wins the ai race what is

SPEAKER_32: the worst scenario ask what it means first ask what is that's literally what i'm asking like what would that scenario be would they invade america and they dominate us forever and what does it mean

SPEAKER_72: to leave yeah yeah what does it mean to win yeah to me it would mean that they achieve a decisive advantage in ai such that we can't leapfrog them back and an example of this might be something like 5g where huawei somehow leapfrogged us got to 5g first and disseminated it through the world they weren't concerned about diffusion they were interested in promulgating their technology

SPEAKER_101: throughout the world so if the chinese win ai they will sell more products and services around

SPEAKER_72: the globe than the us this is where we have to change our mindset towards diffusion i would define winning as the whole world consolidates around the american tech stack they use american hardware in data centers that again are fundamentally powered by american technology and you know just look at market share okay if we have like 80 to 90 market share that's winning if they have 80 market share then we're in big trouble so it's very simple it means yeah but if the market grows up by 10x it doesn't

SPEAKER_43: matter because the world will have every individual in every country will now have more they will have

SPEAKER_44: a more prosperous life and as a result it's not necessarily the framing about if we don't get there first we are necessarily going to lose i get that there's an edge case of conflict or what have you

SPEAKER_43: but i do think that there's a net benefit where the whole world suddenly is in this more prosperous state

SPEAKER_35: and this is a classic example of a dual use technology where there are both economic benefits

SPEAKER_110: and there are military benefits yes gps would come to mind in this example right like my summary point

SPEAKER_43: is just that it's not all about a losing game with respect to this quote race with other nation states but at the end of the day yes there is risk but i do think that if the the pace of improvement stays on track like it is right now holy i think we're in a pretty good place that's just my point some

SPEAKER_208: positivity okay look i i hope that the ai race stays entirely positive and it's a healthy competition

SPEAKER_72: between nations and the competition spurs them on to develop more prosperity for their citizens but as we talked about at the ai summit there's two ways of looking at the world there's kind of the economist way that jeffrey sachs was talking about and then there's the balance of power way a realist way which meersheimer was talking about and when economic prosperity and survival or balance of power come into conflict it's the realist view of the world that it's the balance of power that gets privileged and i just think that's the way that governments operate is that prosperity is incredibly important we want economic success but power is ultimately privileged over that and this is

SPEAKER_208: why we're going to compete vigorously in high tech that's why there is going to be an ai race okay

SPEAKER_153: perfect segue we should talk a little bit about what was the topic of discussion yesterday i had a lunch with a bunch of family offices and capital allocators uh government folks here in singapore and they were talking about our discussion last week about the big beautiful bill and the debt here in the united states it's permeating everywhere the two conversations at every stop i've made here is the big beautiful bill and the balance sheet of the united states as well as tariffs so we need to maybe revisit

SPEAKER_51: our discussion last week chamath you had uh in freeberg did a an impromptu call with ron johnson over the weekend which then spurred him going on 20 other podcasts uh to talk about this stephen miller from the administration has been tweeting some corrections or his perceived corrections about the bill and sax i think you've also started tweeting this where do we want to start maybe well i think there

SPEAKER_97: are just a couple of facts that should be cleaned up because okay so facts from the administration

SPEAKER_36: their view of our discussion well even though i was defending the bill last week on the whole i wasn't saying it was perfect i was just saying it was better than the status quo yeah you were clear about that yeah but even even i in doing that was conceding some points that i think were just

SPEAKER_72: factually wrong and the big one was i said i was disappointed that doge the doge cuts weren't included in the big beautiful bill what stephen miller's pointed out is that reconciliation bills can only deal with what's called mandatory spending they can't deal with what's called discretionary spending and since the doge cuts apply to discretionary spending they just can't be dealt with in a reconciliation bill they have to be dealt with separately there can be a separate rescission bill that comes up but it can't be dealt with in this bill and just to be very clear look if the doge cuts don't happen through rescission i'm going to be very disappointed in that i really want the doge cuts to happen but it's just a fact that the doge cuts cannot happen in the big beautiful bill it's not that kind of bill and i think it's therefore wrong to blame big beautiful bill for not containing doge cuts when the senate rules don't allow that you know it all goes back to the the bird rules there are only specific things that can be dealt with through reconciliation which is this 50 vote threshold and it has to be quote-unquote mandatory spending discretionary cuts are dealt with in annual appropriations bills that require 60 votes now look this is kind of a crazy system i don't know exactly how it evolved i guess robert bird is the one who came out with all this stuff and maybe they need to change the system but it's just wrong to blame the big beautiful bill for not containing the doge cuts that's just a fact okay so the other thing is that the bbb does actually cut spending it's just not scored that way because when the bill removes the sunset provision from the 2017 tax cuts the cbo ends up scoring that as effectively a spending increase but tax rates are simply continuing at their current level in other words at this year's level so if you used the current year as your baseline okay and then compared it to spending next year it would score as a cut in spending so it's just not it's not correct to say this still increases spending it does actually result in a mandatory spending cut but it's not getting credit for that because we're continuing the tax rates at the

SPEAKER_153: current year's rates do you believe sacks that this administration which you are part of in four years will have spent will have balanced the budget will it have reduced the deficit or the deficit to continue to grow at two trillion a year what is your belief because there's a lot of strategies

SPEAKER_97: going on here yeah my belief is that president trump came into office inheriting a terrible fiscal

SPEAKER_26: situation i mean basically that he created and that biden created they both put a trillion

SPEAKER_72: they both put a trillion on the debt that's just a big difference it's a big difference to add to the deficit when you're in the emergency phase of covet there's emergency spending for that sure it's emergency spending it was never supposed to be permanent and then somehow biden made it permanent and he wanted a lot more remember build back better he wanted a lot more so you know it's it's tough when you come into office with a what is two trillion dollar annual deficit to my original question now look hold on would i like to see the deficit eliminated in one year yeah absolutely but there's just not the votes for that well i asked you there's a one vote margin here in the house and the democrats aren't cooperating in any way so i think that the administration is getting the most done that it can this is a mandatory spending cut and i think the doge cuts will be dealt with hopefully through rescission in a subsequent bill i'm asking you about four

SPEAKER_32: years from now will we be sitting here in four years will trump have cut spending by the end of this term in another three and a half years will we be looking at a balanced budget potentially is that the goal of the administration or will we be at 42 44 45 trillion dollars at the end of trump's

SPEAKER_35: second term david said if you want that level of specificity you're going to have to get scott bestin on okay this is just not my area i'm not going to pretend to have that level of detailed

SPEAKER_72: answers but what i believe is that the trump administration's policy is to spur growth i think that these tax policies will spur growth i think that ai will also be a huge tailwind it'll be a productivity boost i think let's stop being doomers about it we need that productivity boost and i think that the net result of those things will be to improve the fiscal situation do i want more spending cuts yeah but look we're getting more than was represented last week let's put it that way okay

SPEAKER_153: fair enough sax thank you for the cleanup there chamath our bestie elon was on the sunday shows and he said hey the bill can be big or it can be beautiful it can't be both he seems to be i'll say displeased or maybe not as optimistic about balancing the budget and getting spending under control but he still believes in doge obviously and and hopefully doge continues you seemed a little bit concerned last week a week's past you've heard some of stephen miller's opinions where did where

SPEAKER_133: you net out seven days from our big beautiful budget bill debate last week are we glad i mean

SPEAKER_95: i think stephen's critique of how the media summarized the reaction to the bill is accurate

SPEAKER_59: and i think it's probably useful to double click into one thing that sax didn't mention but that stephen did a lot of this pivots around the cbo which is the congressional budget office and how they look at these bills and there's a lot of issues with how they do it in one specific case which sacks just mentioned and stephen talked about is that they have these arcane rules about the way that they

SPEAKER_95: score things and what they were assuming is that the tax rates would flip back to what they were before the first trump tax cuts which obviously would be higher than where they are today what that would

SPEAKER_59: mean in their financial model is we were going to get all that money now to maintain the tax cuts where we are they now then would look at that and say oh hold on that's a loss of revenue why are all of these things important i downloaded the cbo model went through it and what i would say is at best it's spartan which means that i don't think a financial analyst or somebody that controls a lot of money will actually put a lot of stock in their model i think what you'll have happen is people will build

SPEAKER_50: their own versions bottoms up do you trust it the the cbo's version of this or do you largely trust it

SPEAKER_136: i don't think the cbo really knows what's going on to be totally honest with you okay i think that

SPEAKER_59: there are parts of what they do which they're also opaque on nick i sent you a tweet from goldman sachs so here's what goldman put out now the point is when you build a model what you're trying to do is

Chamath Palihapitiya: net out all of these bars okay you're trying to add the positive bars and the negative bars and you figure out what is the total number at the end of it now in order to do that when you see the bars on

SPEAKER_59: the far right that's a 2034 dollar that's very different than a 2025 the cbo doesn't disclose how they deal with that they don't just disclose the discount rate so you can question what that is the cbo makes these assumptions that you know as steven pointed out are very brittle with respect to the tax plan that's not factored in here so those are the issues with the way the cbo scores it so you have to do it yourself now peter navarro published an article which i think is probably the most pivotal article about this whole topic peter of tariff fame yeah yeah here i think he nails it

SPEAKER_12: right in the bullseye which is the bond market needs to make a decision on one very critical assumption

SPEAKER_59: when they build their own model okay so let's ignore the cbo's kind of brittle math and the excel that they post on their website people are going to do their own because they're talking about managing

SPEAKER_12: their own money but navarro basically points to the critical thing which is listen those cbo assumptions

SPEAKER_59: also include a fatal error which is they assume these very low levels of gdp what you're probably going to see in q2 is a really hot gdp print if i'm a betting man which i am i think the gdp print's going to come in above three not quite four but above three and so what peter is saying here is hey guys like you're estimating 1.7 gdp why don't you assume 2.2 or why don't you assume 2.7 or any number or really what he's saying is why don't you build a sensitivity so that you can see the implications of that and i think that that is a very important point okay so where do i net out a week later jason it's pretty much summarized in the tweet that i posted earlier today so over the last week as people have digested it i think that there are small actors in this play and big actors the biggest actor is obviously president trump but the second biggest actor is the long end of the bond market these are the central bankers the long bond holders and these macro hedge funds why because they will ultimately determine the united states's cost of capital how expensive will it be to finance our deficits irrespective of whatever the number is it could be a dollar or it could be a trillion dollars that doesn't matter right now the point is what is going to be our cost of capital and what's happened over the last little while is that they've steepened the curve and they've made it more expensive for us to borrow money that's just the fact so how do we get in front of this i think the most important thing if you think about what peter navarro said is this plan and the bill can work work if we get the gdp right okay so how do you get the gdp right and this is where i have one very narrow set of things that i think we need to improve and the specific thing that i'll go back to is today america is at a supply demand trade-off on the energy side what does that mean we literally consume every single bit of energy that we make we don't have slack in the system we are growing our energy demands on average about three percent a year so i think the most critical thing we need to do is to make sure the energy markets stay robust meaning there's a lot of investment that people are making on tuesday i announced a deal that i did building a one gigawatt data center in arizona there's a lot of money this is little old me but there are lots of people ripping in huge huge huge checks hundreds of billions of dollars i think the sole focus has to be to make sure that the energy policy of america is robust and it keeps all the electrons online if there's any contraction i think it'll hit the gdp number because we won't have the energy we need and that's where things start to get a little funky so i think where i am is i think president trump should get what he wants i think the bill can work narrowly address the energy provisions and i think we live to fight another day so friedberg

SPEAKER_51: cynical approach might be we're working the refs here the cbo is not taking into gdp this gdp has a magical unicorn in it ai and energy is going to spur this amazing growth but the bond markets don't

SPEAKER_32: believe it either so are we looking at just a gop a party i'll put the administration aside that is just as recklessly spending as the democrats and they want to change the formula by which they're judged

SPEAKER_51: in the future that there's going to be magically all this growth and growth solves all problems and what we really need to do to your point i think two weeks ago that this is just disgraceful to put up this much spending and we have to have austerity and we need to increase uh maybe the discipline in

SPEAKER_108: the country and both parties have to be part of that i'm asking you uh from the cynical perspective

SPEAKER_44: maybe to represent or steal me on the other side here we had a conversation with senator ron johnson after we recorded the pod last week and he was very clear in a key point which is that this bill addresses mandatory spending just to give you a sense 70 of our federal budget is mandatory spending 30 falls into that discretionary category the mandatory spending is composed of the interest on the debt which is now well over a trillion dollars a year on its way to a trillion five almost a trillion a trillion a year medicare medicaid social security and some other income security programs and as ron johnson shared with us over the years more and more programs have been put into the mandatory spending category and so you can get past the filibustering in the senate to be able to get budget adjustments done the key thing he's focused on and rand paul is focused on and i've talked about is the spending level of our mandatory programs the big beautiful bill proposes a roughly 70 billion dollar per year cut in medicaid okay and that sounds awful how could you do that to people in 2019 the year before covid medicaid spending was 627 billion dollars 2024 it was 914 billion so the 70 billion dollar cut gets you down to 840. you're still roughly call it 40 percent above where you were in 2019 so is that the right level and fundamentally the opportunity to cut those mandatory programs which i know sounds awful to cut social security and cut medicaid but the reality is they're not just being cut from a low level they're being cut from a level that's 60 plus percent higher than they were in 2019 i gave you another example which is the snap program the food stamp program again uh 15 billion dollars of the 120 a year that we spend on food stamps is being used to buy soda and a whole another chunk of that 120 is being used to buy other junk food so that they have proposed in this bill to cut snap down to 90 and it was 60 in 2019 so it's still 50 above where it was in 2019 so the key point that's being made by ron johnson and others is that the spending on these mandatory programs which account for nearly three quarters of our federal budget are still very elevated relative to where we were in 2019 and we are not going to get out of our deficit barring a massive increase in gdp without changes to the spending level now i don't put the blame on the

SPEAKER_43: white house this bill passed with one vote in the house one vote and so a key point to note and i've said

SPEAKER_44: this from day one and every time i've gone to dc and every time we've talked about doge i've said there's no way any of this stuff's going to change without legislative action from the congress and here we are seeing congress for whatever reason you can listen to ron johnson you can listen to ram paul you can listen to others say you know what we can't cut that deep it is going to be too harmful to our constituents we need to keep the programs at their current levels or make no changes at all or only modest changes and that's where we are that's the reality now i do think that navarro did an excellent job in his op-ed for whatever criticism we may want to lay on navarro for many other things he pointed out that the cbo projections in 2017 for the next year's gdp growth numbers was 1.8 to 2 and it actually came in at 2.9 a full one point higher because of the tax and jobs act that was passed by the trump administration in 2017. so the additional money that goes into investments because lower taxes are being paid fueled gdp growth this is what some people call trickle down economics people ridicule it they say it doesn't work it's not real but in this particular instance they cut taxes and the gdp grew much faster than was projected or estimated by the economists at the cbo so the argument that's being made is that we are not capturing many of the upsides in the gdp numbers that are being projected and i will be honest about this i don't think anyone knows how much the gdp is going to grow we don't know the economic benefit and effects of ai we don't know the economic benefits and effects of the work that's being done to deregulate another key point which is not talked about by navarro or anywhere else there's a broad effort to deregulate standing up new energy systems deregulate industry and pharma deregulate banking besan talked about this in our interview with him all of those deregulatory actions theoretically should drive more investment dollars because if you can get a biotech drug to market in five years instead of 10 you'll invest more in developing new biotech drugs if you can stand up a new nuclear reactor in seven years instead of 30 you'll build more nuclear reactors money will flow if you can um get a new factory working because it's a lot easier

SPEAKER_110: and faster to build the factory and cheaper you'll build more factories and production will go up people were really taken by the way by your comment that you would shut up about the

SPEAKER_51: deficit if we had like a really great energy policy we were dumping a lot on top of it i want to build

SPEAKER_35: on the point that both jamatha and freeberg made about growth rates so there's a very important chart here from fred this is the federal reserve st louis this is federal receipts so basically it's federal

SPEAKER_36: tax revenue as a percent of gdp and this goes all the way back to you know the 1930s 1940s so if you look in the post world war ii period you can see just eyeballing it that there's a lot of variation

SPEAKER_72: around this but the line is around 17 and a half percent plus or minus two percent and the interesting thing is that this chart reflects radically different tax rates so for example during some of these

SPEAKER_36: periods we've had 90 percent top marginal tax rates we've had 77 top top marginal tax rates so yeah under jimmy carter the top marginal tax rate was i think 70 we've had tax rates you know under reagan

SPEAKER_72: or clinton in the 20s so the point is that the the tax rate that you have and what you actually collect as a percent of gdp don't correlate the most important thing by far is just how the economy is

SPEAKER_36: doing if you look at the top tick it's around 2000 there if you just mouse over it 1999 to 2000 yeah

SPEAKER_175: we get like just under 20 percent of federal receipts a percent of gdp and tax rates were quite

SPEAKER_72: low back then the reason why is we had an economic boom so look the point is the most important thing in terms of tax revenue is having a good economy and this is why you don't just want to have very high tax rates because they clobber your economy so this point that navarro was making in that article it actually makes sense i mean 1.7 is a pretty tepid growth assumption we should be able to grow a lot faster and if we have a favorable tax policy you can grow a lot faster now if you go to spending you can pull up the fred chart on spending what you see here is that i mean it's been kind of going up but let's say that since the 19 mid 1970s or so federal net outlays as a percent of gdp so basically spending was around 20 percent of gdp and then what happened is during covet it went crazy went all the way up to 30 percent and now it's back down to you know low 20s but it's still not back down to 20 and what we need to do is grow the economy we have to grow gdp to the point where federal net outlays are back around 20 percent if you could get tax revenue to the historical mean of around 17 and a half percent or 17 percent you get spending to 20 then you have a budget deficit of three percent which is much more tolerable and i think that's best's target under his three three three plan

SPEAKER_171: right is you get gdp growth back up to three percent and you get the budget deficit down to three percent

SPEAKER_59: all right you had some charts you wanted to share well i think what's amazing is if you take last week

SPEAKER_12: and now again this week we're all converging on the same thing the path out of this is through gdp growth

SPEAKER_59: and i just want everybody to understand where we are and this is without judgment this is just the facts what this chart shows in gray is the total supply of power in the united states and the blue line is the utilization so what you build for is what you think is a premium above the demand right you'd say if there's one unit of demand let's have 1.2 units of supply we'll be okay but as it turns out historically in the united states we've had these cycles where we didn't really know what the demand curve would look like and so over the last number of years we've stopped really building supply in power but what happened with things like ai and all of these other things is that the demand just continued to spike and so what this chart shows is we are at a standstill sitting here today in 2025 on margin we're actually short power which is to say sometimes there are brownouts sometimes there's lack of power because we didn't add enough capacity so that's where we are today so then we talk about all of these new kinds of energy and this is just meant to ground us in the facts if you've tried to turn on a project today sitting here in may of 2025 here's what the timelines are we all talk about smr's small modular reactors the reality is that if you get everything permitted it and you believe the technology can be de-risked you're still in a 2035 plus time frame you're a decade away if you have an unplanned nat gas plant today the fastest you could get that on is four years from now if we tried to restart a mothballed nuclear reactor of which there are only three we can restart that's a 20 27 to 2030 time frame so let's give us the benefit of the doubt that's two years away if we needed a planned nat gas plant there's already 24 gigawatts in the queue which can't get turned on so where does this end up and this is where i think we need to strip away all the partisanship and understand what we're dealing with we have ready supply of renewable and storage options today it's the fastest thing that you can turn on it allows us to turn on supply to meet the demand and utilization so i just think it's important to understand that we must not lose energy we cannot lose the energy market because that is the critical driver of all the gdp all right

SPEAKER_153: nippon steel and the u.s steel merger got cleared by president trump this was something that was being blocked by biden obviously for national security reasons nippon is going to acquire your steel 14.9 billion biden blocked that as we had discussed on friday trump cleared the deal to go through calling it a partnership that will create 70 000 jobs in the u.s and on sunday trump called the deal an investment saying it's a partial ownership but it will be controlled by the usa there seems to be a reframing

SPEAKER_101: of this deal and that the united states is going to benefit from it but it's not a sale let's let's

Chamath Palihapitiya: it's an investment yeah let's set some context the united states is always on the wrong side of these

SPEAKER_12: deals okay we've been on the wrong side for 20 years meaning we show up when an asset is stranded or completely run into the ground for example we did the auto bailouts at the end of the great financial crisis if it's not a company and there's toxic assets we set up something called tarp what do we get not much in return in this it's the opposite and i think that this strategy has worked for many other countries really well so if you look at brazil companies like embraer and vale which are really big brazilian national champions have a partnership a pretty tight coupling with the brazilian government the brazilians have a golden vote if you look inside of the uk there's a bunch of aerospace and defense companies including rolls-royce that have a very tight coupling with

SPEAKER_59: the uk government they have a golden vote if you look in china companies like bite dance and catl have a very tight coupling with the chinese government and the chinese government has a golden vote

Chamath Palihapitiya: and so what are all of those deals those deals are about companies that are thriving and on the forward

SPEAKER_59: foot and so i think this is a really important example of things that we need to copy i've said this before the one part of china that i think we need to pay very close attention to is hu jintao in 2003 laid out a plan and he said we are going to create 10 national champions in china in all the critical industries that are going to matter for the next 50 years including things like batteries and rare earths and ai and they did it but for those companies that allowed them to thrive and crush it and i think that we need to do that and compete with those folks on an equal playing field so in all

SPEAKER_153: industries or in very specific strategic ones because that would seem like there's corrupting capitalism and free markets would be the steel man yeah there's 10 industries that matter and you

SPEAKER_59: have a problem steel is one okay i think the precursors for pharmaceuticals are absolutely critical got it i think ai is absolutely critical i think the upstream lithography and ev deposition and chip making capability absolutely critical i think batteries are absolutely critical and i think rare earths and the specialty chemical supply chain absolutely critical if you have those five you are in control of your own destiny in the sense that you can keep your citizens healthy and you can make all the stuff for the future so i think if the president is creating a more expansive idea beyond us deal with this idea of us support maybe there'll be preferred capital in the future to us deal but if he creates a category by category thing across five or six of these critical areas of the future i think it's super smart and we should do more of it sax what do you think interventionism putting your

SPEAKER_153: thumb on the scale golden votes a good idea for america in very narrow verticals or let the free market decide what are your thoughts on this golden vote having a board seat etc well it depends what the free

SPEAKER_35: market so to speak produced and the reality is over the past 25 years is we exported a lot of this manufacturing capacity to china and i don't think it was a free market because they had all these

SPEAKER_36: advantages under the wto that we talked about on previous podcasts they were able to subsidize their national champions while still remaining compliant with the wto rules because supposedly they're a developing country it was totally unfair and what they would do is through these subsidies they would allow these national champions to essentially dump their products in the global market and drive everyone else out of business they became the low-cost producers i think that as a president just said recently not every industry has to be treated as strategic clothes and toys we don't necessarily have to reach or in the united states but steel production is definitely strategic steel aluminum and i'd say the rare earths we have to have that capacity we cannot be completely dependent on china for our supply chain so some of these industries have to be reassured and if you

SPEAKER_75: need subsidies to do it i think that you do it for national security reasons first and foremost

SPEAKER_36: there are other sense yeah there are other industries where the private market works just fine and what we need to do to help those companies is simply not get in their way with unnecessary red tape and regulations so i would say empower the free market when america is the winner and then in other areas where they're necessary for national security then you have to be willing to basically protect our industries

SPEAKER_153: freeberg it seems like the great innovation here might also be the american public getting upside when we gave loans to solyndra and tesla and fisker and a bunch of people for battery powered you know energy under obama we just got paid back in some cases by elon other people defaulted but we didn't

SPEAKER_51: get equity what if we had instead of getting our 500 million back in the loan from from elon which he paid back early and with interest if we got half back and we got half in equity rsus whatever stock options warrants this would be an incredible innovation so what are your thoughts here because people look to this podcast as hey the free market podcast but this does seem to be a notable exception here of

SPEAKER_26: maybe we should get involved and do these golden you know share votes board seats you know maybe more creative um structures in order to win faster what are your thoughts i don't like it i don't like the

SPEAKER_43: government markets keep the government out of the markets it creates a slippery slope first of all i think markets don't operate well if government's involved it gets inefficient and that hurts consumers

SPEAKER_270: it hurts productivity it hurts the economy second i think it's a slippery slope you do one thing now

SPEAKER_35: question though if government non-intervention results in all the steel production moving offshore if it results in all the rare earth processing and the rare earth magnet casting industries moving

SPEAKER_72: offshore in fact not just moving offshore but moving to an adversarial nation such that they can just switch off our supply chain for pretty much every electric motor is that an outcome of the

SPEAKER_207: quote-unquote free market that we should accept well then i think that's where the government can play a role in trade deals to to manage that effect so you can create incentives that'll drive onshore

SPEAKER_44: manufacturing by increasing the tariff or restricting trade with foreign countries so that there isn't a cheaper alternative which is obviously one of the plays that this trump administration is trying to do i'd rather have that mechanism than the government making actual market-based decisions and business decisions you know how inefficient government runs you know how difficult it is to assume that that bureaucracy is actually ever going to act and pick any best interest or any good interest at all they're just going to get all up so i'd rather keep the government entirely out of the market create a trade incentive where the trade incentive basically will drive private markets private capital to build that industry onshore here because there isn't one and there's demand for it because you've restricted access to the foreign market that i think would be the best general solution sex and then i think it's a slippery slope because then you could always rationalize something being strategic something being security interests in the united states so then every industry suddenly gets government intervention and government involvement and then the third thing is i don't want the government making money that the congress then says hey we've got more money we've got more revenue let's spend more money because then they'll create a bunch of waste and nonsense that'll arise from having increased revenue one side and i will say i one thing where i do think we do a poor job is we don't do a good job to answer your question j cal of investing the retirement funds that we've mandated through social security we should be taking the four and a half trillion dollars that our social security beneficiaries have had deducted from their paychecks over many many years and those social security future retirees or current retirees are getting completely ripped off because their money is being loaned to the federal government it's not being invested it's been loaned to the government to spend money and run a deficit and ultimately inflate away the value of the dollar we should have been investing those dollars in some of these strategic assets so if ever there were to be shares or investment that the government does it should be done through strategic investing through the social security retirement program similar by the way to what's done in australia where these uh these supers are have created an extraordinary surplus of capital same in norway same in all the middle east countries incredible sovereign wealth funds that benefit the retirees and the population at large that's where the dollars should be invested from i do think the fundamental focus priority right now should be reforming social security while we still have the chance we have until 2032 when social security will be functionally bankrupt and everyone's going to get overtaxed and kids are going to end up having to pay through inflation for the benefits of the retirees of the last generation februck's right we're on a

SPEAKER_09: seven-year shot clock to when social security is not funded and by the way this opportunity to fix

SPEAKER_48: mandatory spending it was an opportunity to introduce some structural reform in social security another

SPEAKER_44: reason why i think that there is a degree of disgrace in this bill particularly with how congress had acted and not addressing what is becoming a critical issue because everyone wants to get re-elected in the next 12 months 18 months they've got elections coming up so everyone's scrambling to not mess with that because you can't touch it it's like you know what guys this is bankrupt

SPEAKER_43: in seven years it's going to cost us five ten times as much when we have to deal with it when everyone runs out of money deal with it now fix the problem and by the way we should flip all that money four and a half trillion dollars into an investment account for the retirees where they

SPEAKER_44: can own equities and they can make investments in the markets and they can participate in the upside of american industry and the gdp growth that's coming instead they're getting paid 3.8 percent or four four and a half percent average from treasuries that they own that by the way are now

SPEAKER_43: have a lower credit rating than they've ever had you know it's crazy i i'm in complete

SPEAKER_278: agreeing with you and i think it's a lack of leadership on trump's part if trump is going to

SPEAKER_51: criticize taylor swift and zelensky and putin and everybody you know all day long on truth social

SPEAKER_26: he can criticize congress and the democrats and the republicans on not cutting spending i think he should speak up i think he was elected to do that it was a big part of the mandate and uh he should tone down the tariff uh chaos and tone up the uh and lean into uh intelligent immigration you know recruiting great talent to this country and he should be pushing to make these bills uh control spending that's just one person's belief for the chairman dictator timothy hapatia your czar

SPEAKER_279: david sacks in that chris brioni white shirt very beautiful and the sultan of science deep in his

SPEAKER_153: wali era i am the world's greatest moderator and as freeberg will tell you executive prison for

SPEAKER_230: life here at the all in podcast we'll see y'all next time bye bye jason at all in love you boys

SPEAKER_282: david sacks

SPEAKER_292: we need to get