E28: Current state of public & private markets, Archegos debacle, US debt issues, wealth tax & more

1. 0:00 – 18:54

   Besties intro, state of the public & private markets

   1. CPChamath Palihapitiya0:00

      (singing) My name is David Sacks and I have a broomstick in my (censored) . That is why my voice is so deep.

   2. DSDavid Sacks0:08

      (laughs)

   3. CPChamath Palihapitiya0:08

      I have never had friends in my life. Somebody be my friend who I don't pay.

   4. DSDavid Sacks0:16

      (laughing)

   5. DFDavid Friedberg0:18

      What a mood we're in today, huh?

   6. JCJason Calacanis0:20

      What a vibe.

   7. NANarrator0:21

      Going all in. Let your winners ride. Rain Man, David Sacks. Going all in. And I said, we open sourced it to the fans and they've just gone crazy with it. Love you guys. Queen of Quinoa. Going all in.

   8. JCJason Calacanis0:40

      Hey, everybody. Hey, everybody. Welcome to another episode of the All-In Podcast. With us today, the rotating cast of characters that you've come to know and love and follow on the Twitter, the Queen of Quinoa, David Friedberg is here, and The Rain Man, David Sacks, calling in from one remote location that is undisclosed, and The Dictator, Chamath Palihapitiya, with us again. Gentlemen, uh, how's everybody doing?

   9. CPChamath Palihapitiya1:09

      I'm punchy.

   10. JCJason Calacanis1:11

       You're punchy?

   11. CPChamath Palihapitiya1:13

       I'm punchy.

   12. DFDavid Friedberg1:13

       Chamath is in a mood.

   13. JCJason Calacanis1:15

       Is he in a mood?

   14. CPChamath Palihapitiya1:16

       I'm in a mood.

   15. JCJason Calacanis1:16

       What's happening, Chamath?

   16. CPChamath Palihapitiya1:17

       Nothing, I just, uh, I just finished a workout, so I think I'm high on endorphins.

   17. JCJason Calacanis1:21

       Oh, great.

   18. DSDavid Sacks1:21

       How much money did you lose in the market today?

   19. JCJason Calacanis1:25

       (laughing)

   20. DSDavid Sacks1:25

       (laughing)

   21. DFDavid Friedberg1:25

       (laughing)

   22. JCJason Calacanis1:25

       Wow. Sacks comes in at just a flagrant foul of the first play of the game? (laughs)

   23. DSDavid Sacks1:30

       No, he, he said, he said he wasn't happy, so I was just, I was just hypothesizing about what-

   24. CPChamath Palihapitiya1:35

       No, no, no. I's and I am happy.

   25. JCJason Calacanis1:35

       ... maybe the cause-

   26. CPChamath Palihapitiya1:36

       I am happy. No, no, no, I am happy.

   27. DSDavid Sacks1:37

       Okay.

   28. CPChamath Palihapitiya1:37

       I'm about to go on Easter vacation-

   29. DSDavid Sacks1:39

       (laughs)

   30. CPChamath Palihapitiya1:39

       ... uh, so I'm happy about that. Actually, can I just tell you-
2. 18:54 – 21:17

   Chamath receives inspiring note re: last week’s longevity talk

   1. JCJason Calacanis18:54

   2. DSDavid Sacks18:54

      Don't you think?

   3. JCJason Calacanis18:54

      Sure. And then second, on the, um, housekeeping front, people were really interested in this longevity discussion.

   4. CPChamath Palihapitiya19:02

      Oh, read the thing. Read the thing. I think I wanna... 'Cause I wanna talk about it again.

   5. JCJason Calacanis19:05

      Okay. So Ben sent this in to the All In, um, Twitter handle, which is I think TheAllInPod. And it's got 70... Do you guys know we have 70,000 followers on that Twitter handle? It's crazy. "Hey, just wanted to reach out with a positive message after listening to the podcast from two Fridays ago. If you could pass the message along to the besties." I think that's us. "After Chamath's recommendation regarding longevity, I suggested to my dad, age 56 in perfect health." So he's 10 years younger than Sax looks.

   6. DSDavid Sacks19:30

      (laughs)

   7. CPChamath Palihapitiya19:30

      Um, to go get a calcium dye test. It turns out he scored well above any safe number and a critical heart failure was inevitable. Now he's taking proactive steps with a cardiologist. It's hard to even fathom what would have happened if Chamath had him passionately recommended this action. Thank you guys so much for providing value week in, week out." I just, I, I wanna...

   8. DFDavid Friedberg19:55

      Chamath saving lives.

   9. CPChamath Palihapitiya19:56

      Ugh, come on.

   10. JCJason Calacanis19:57

       Chamath saving lives-

   11. CPChamath Palihapitiya19:58

       Hey, no, no, no, stop.

   12. JCJason Calacanis19:59

       ... and making billions.

   13. CPChamath Palihapitiya20:00

       No, don't, don't joke around. It's stupid, um, on this topic. I, I really want to say this again. If anybody, um, hasn't done it after the age of 40, you can get a CT angiogram. Um, most health services provide it. Um, I would really ask your primary care physician. If they say no, tell them to go fuck themselves and find somebody who will give it to you. But this is one of these things where if your calcium score is greater than zero, it doubles every year. And there's a certain score right above several thousand where you are guaranteed to have some meaningful cardiac issue. And so whether it's for you or your parents, just ask the question, "Have you had a contrast CT angio done?" And if not, go and find a doctor who will prescribe it to them and get it done. It's just a no-brainer.

   14. JCJason Calacanis20:45

       I, um, I took it-

   15. CPChamath Palihapitiya20:46

       It's a no-brainer.

   16. JCJason Calacanis20:46

       It's a no-brainer. And I, I had my yearly physical, and I got the, um...

   17. CPChamath Palihapitiya20:52

       Heart flow?

   18. JCJason Calacanis20:53

       Not... No, I just did my physical, but I, I'm gonna do that, um, full body scan you recommended.

   19. CPChamath Palihapitiya20:58

       Pre- pre-Nuvo? Yeah.

   20. JCJason Calacanis20:59

       Pre-Nuvo I'm doing. And then I got on the NAT plus booster, the Truu Niagen that, um-

   21. CPChamath Palihapitiya21:04

       Yeah.

   22. JCJason Calacanis21:05

       ... I think, uh-

   23. CPChamath Palihapitiya21:06

       Freeburg suggested.

   24. JCJason Calacanis21:06

       ... that Freeburg suggested. And I'm taking it seriously. And I started with my personal trainer two Tuesdays ago, and I changed my entire diet. And I'm just really taking it seriously now 'cause I hit 50.

3. 21:17 – 32:26

   Archegos debacle, issues with trading on margin

   1. JCJason Calacanis21:17

   2. CPChamath Palihapitiya21:17

      So let me, let me tell you about Archegos. So here's a guy. This is incredible. So this guy, uh, ran Asia Pac for Julian Robertson. Julian Robertson is a legend of finance and capital markets and was the founder of Tiger, Tiger Management. By the way, I heard this incredible story. Um, why did Julian, uh, name it Tiger Management? Apparently, he had a na- He was incredibly bad with names, and so he would just call everybody Tiger. Like, "Hey, Tiger. How you doing, Tiger?"

   3. DFDavid Friedberg21:46

      (laughs)

   4. CPChamath Palihapitiya21:46

      "Tiger, Tiger, Tiger." And so when he started this fund, I think his son apparently told him, "Dad, you're not gonna remember anybody's name. You're not even gonna remember the name of the company. Just call it Tiger Management and you'll remember it." Anyways, Julian is famous for having, um, attracted an incredible roster of people to work for him. It's what the PayPal mafia would look like if it were disguised as a hedge fund. All these amazing people worked for Julian, went off and did these in- other incredible things. And, um, one of this guy... one of these guys was this guy Bill Hwang, who ran Asia Pac for Tiger. He leaves, he starts his own fund. And somewhere in 2011, he gets pinched, uh, by the feds for insider trading some Chinese bank stocks. He pays a $60 million criminal and civil penalty, and he's forced to give back all of his outside money. And so now he's a family office. Then he takes however much money he had, and he runs it up to somewhere between five and $10 billion. So this is a guy who managed to just hit the ball out of the park. And then what he does is he goes to these banks and he says, "You know what, guys? I'm gonna make a bunch of concentrated bets in a bunch of Chinese internet companies and, uh, media companies, like Viacom and Discovery." So what he does is he does an equity swap. And what an equity swap is, to, to, to get through all the noise, is just a very simple way for you to bet on the appreciation of a stock relative to an index and hedge it against an index. And what it synthetically allows you to do is take big risk, own huge positions, and not be listed in disclosures. So if you don't want-

   5. DFDavid Friedberg23:19

      Without, without buying the stock?

   6. CPChamath Palihapitiya23:20

      Yeah. So if you don't want to know, if you want in-

   7. JCJason Calacanis23:21

      So the word synthetic, just so I... 'cause I'm confused. Synthetic means you're not actually buying the stock. You're doing this in the ether?

   8. CPChamath Palihapitiya23:28

      If you went and bought 4.9% of Viacom, nothing would happen. The minute you got to 5%, you'd have a f- a regulatory filing, uh, obligation that would say Jason Calacanis owns 5% of Viacom. Then at 9.9%, nothing else would happen. But then at 10%, there's another incremental thing. So, this was a way of him accumulating up to 9.9 or 10% of these positions without having to disclose because he's not actually buying the stock. He's having Morgan Stanley, Goldman Sachs, uh, Nomura, Deutsche Bank, Credit Suisse buy the stock for him using these, uh, over-the-counter derivatives.

   9. DFDavid Friedberg24:05

      But they're not e-... They, they did- in some cases, didn't even buy the stock. It was like a forward purchase agreement almost, right? Like, these, these were, uh, these were contracts for difference. So they didn't even have to buy the stock in a lot of cases, right?

   10. CPChamath Palihapitiya24:16

       Right. And then I think it was hedged b- by, uh, the S&P, right? So p- they basically hedged it out with the S&P, and it was like factor weighted. Anyways, long story short, what happens is that, uh, the guy starts to get stopped out on a trade-... and then they have to close out all these positions and so all of a sudden they realize, "Oh my gosh, we actually, each of us gave this guy five or 10 times leverage." So instead of a $5 or $10 billion hedge fund, it was (laughs) $50 billion of notional exposure. And so in one day, you had Viacom go down 30%, Discovery went down-

   11. JCJason Calacanis24:48

       This was all on Friday.

   12. CPChamath Palihapitiya24:49

       ... 30 or 40%.

   13. JCJason Calacanis24:50

       And we were playing cards looking at the market saying, "What's going on?"

   14. CPChamath Palihapitiya24:53

       What's going on?

   15. DFDavid Friedberg24:54

       Yeah.

   16. CPChamath Palihapitiya24:54

       Uh...

   17. JCJason Calacanis24:54

       So weird.

   18. CPChamath Palihapitiya24:55

       But, but another, another example of like asymmetric information and a lack of transparency in financial markets.

   19. DFDavid Friedberg25:01

       Yeah. There, there were two drivers of this. Number one is the guy traded via the swap, uh, these, these over-the-counter transactions, so he didn't actually have to go buy the stock on the market. Um, and number two is they, uh, uh, they, the guy relied on a number of exemptions as a family office, right, Chamath? So he didn't have a lot of reporting requirements that say, um, you know, a lot of other funds might, might, might have to disclose. Um, and so there was a kind of, uh, opacity to the transactions that were going on. So ultimately when, um, when everyone kinda looked under the hood, it was like, "Uh-oh." This is a lot like that Long-Term Capital Management, the, uh, fiasco that happened in 1997. I think we talked about it on one of the, the shows, but they had a book with like 60,000 derivative contracts with over a trillion dollars of notional exposure on a $5 billion book of business. So if the, you know, if the overall, uh, portfolio that they held moved by (laughs) whatever it is, you know, f- half a percent, the whole thing collapses, and that's effectively what happened when stocks got volatile in 1997 during that currency crisis. And then all the banks looked under the hood and they're like, "Oh, wait, I need more collateral." There was no collateral to post 'cause everything was levered up and then everyone's struggling to get a piece of the pie, uh, you know, of, of the cash that's left, everyone was fighting to get a piece of it. 'Cause if everyone had to sell off, the whole portfolio would collapse and everything starts to spiral outta control. And that's sort of what happened on Friday, right? Because as they started to sell off these positions via big block trades, the stock went down and made it even harder, and then everyone piles on and starts shorting the stock and it becomes this uncontrollable fiasco.

   20. JCJason Calacanis26:29

       I, I have a really dumb question. For the... Why are people giving this amount of leverage and letting people make these trades? Is it because they have no responsibility, the brokerage houses or whoever's clearing these trades?

   21. DFDavid Friedberg26:39

       No, they're gonna lose, they're gonna lose money. I mean, I think JP Morgan, Nomura, these guys are all gonna lose billions of dollars because there's not enough cash in-

   22. JCJason Calacanis26:45

       Why... Yeah.

   23. DFDavid Friedberg26:45

       ... this guy's actual account to cover all the losses now.

   24. JCJason Calacanis26:48

       So why would they let him do this? Is my really simple, stupid question-

   25. DFDavid Friedberg26:52

       'Cause somebody who knows-

   26. CPChamath Palihapitiya26:53

       Because they-

   27. DFDavid Friedberg26:53

       ... they make m-

   28. JCJason Calacanis26:53

       Because they-

   29. DFDavid Friedberg26:53

       Because they make money.

   30. CPChamath Palihapitiya26:54

       They make money.
4. 32:26 – 45:45

   Biden’s infrastructure bill, US government becoming overleveraged

   1. DSDavid Sacks32:26

      me ask- Let me ask a question to you guys. If- If we all agree it's a really bad idea for individuals to get over levered like this, how bad an idea is it that the US government is getting so over levered? We now have 130% of our GDP we are now in debt. It's the first- I mean, we're- I think it only recently crossed 100%. So we- we have now borrowed, as a country, more than our entire GDP. And I mean- Yeah, but we're- I mean, if you look at that by country, there are other countries that are way over that.

   2. CPChamath Palihapitiya32:59

      Right?

   3. DSDavid Sacks32:59

      Like Japan, just about. Yeah. (laughs) There aren't that many- there aren't that many. And Japan's had a horrible decade partly because of all that debt.

   4. CPChamath Palihapitiya33:05

      Italy, Portugal, Greece, and Japan, yeah.

   5. DSDavid Sacks33:07

      Yeah. Not-

   6. CPChamath Palihapitiya33:08

      Not a club you want to be part of.

   7. DSDavid Sacks33:09

      Not a-

   8. CPChamath Palihapitiya33:09

      Not a club you want to be part of. (laughs)

   9. DSDavid Sacks33:11

      (laughs)

   10. CPChamath Palihapitiya33:11

       I- I- I- I- I- I think the- I'm more sympathetic to governments being over levered because I think... because governments effectively are, at this point still, that may not be the case in the future, the- the only form of too big to fail that I think we can tolerate. I have a much bigger issue with private market participants being over levered because I think that is a level of greed and risk that shouldn't exist, simp-

   11. DSDavid Sacks33:37

       Unnecessary.

   12. CPChamath Palihapitiya33:38

       ... in large part because the governments themselves are so levered on the way in. So maybe that's the way to think about it, which is, if we have to isolate risk and we know we can't tell governments to stop spending, then I think we should probably f- make sure that risk is better managed at the individual level, you know? People and companies.

   13. DSDavid Sacks33:54

       Well, do we think-

   14. CPChamath Palihapitiya33:54

       Why can't we- why can't we tell governments to stop spending? (laughs)

   15. DSDavid Sacks33:56

       Yeah, I was about to say-

   16. CPChamath Palihapitiya33:57

       (laughs)

   17. DSDavid Sacks33:57

       ... like, I think we can't tell them that-

   18. CPChamath Palihapitiya33:59

       (laughs)

   19. DSDavid Sacks33:59

       ... 'cause we vote them in. But I mean, this... I- I want to open up the-

   20. CPChamath Palihapitiya34:02

       People like- people vote in spenders. People don't vote in cutters.

   21. DSDavid Sacks34:04

       Well, this is the thing, you know, the Republicans were supposed to be the spendthrifts.

   22. DFDavid Friedberg34:08

       Yeah, no one ever gets elected saying, "I'm not gonna do anything." Right? I mean, Donald Trump may be the first president to have ever actually said that and, you know, actually do something, uh, in that vein when he put a bunch of guys in charge of like the CDC and the Department of Energy and they just cut heads. But, uh, you know, you always go in and you say, "I'm gonna do X that isn't being done today." And as a result, over generations, it adds up. And all of a sudden you wake up and the United States is 250 years old and we have debt equal to 130% of our GDP and we're struggling to maintain the growth rates needed to fund that debt. And you're like, "Uh-oh." (laughs) That's the biggest challenge with democracy and keeping it alive, is um, is the fact that ult- ultimately, everyone wants more. And so over time, you vote for more, and over time, it gets more expensive, and over time, it becomes really difficult to maintain.

   23. DSDavid Sacks34:55

       Can I- Can I just count up the bill for just this year? So as we know-

   24. DFDavid Friedberg34:59

       Yeah, go ahead.

   25. DSDavid Sacks34:59

       ... Biden already passed a w- well... Yeah, so the- the bill so far for this year... First of all, the government is es- is running like a four and a half trillion dollar deficit. A lot of that is, you know, COVID related, but in any event, Biden's already passed a $1.9 trillion, uh, COVID bill. They're now about to pass a, at least, $3 trillion infrastructure bill, which-

   26. CPChamath Palihapitiya35:21

       Two, two, two. The proposal came out-

   27. DSDavid Sacks35:23

       Well-

   28. CPChamath Palihapitiya35:23

       ... it's two, no?

   29. DSDavid Sacks35:24

       Yeah. Uh, well, okay, sorry. It's- it's two for the infrastructure plan, but then there's another one to two billion that they're talking about doing-

   30. DFDavid Friedberg35:32

       Trillion.
5. 45:45 – 52:59

   Potential tax hikes, inefficient deployment of capital, California wealth tax impact

   1. JCJason Calacanis45:45

      and let's create this tax and that tax.

   2. DSDavid Sacks45:46

      Well, Biden is raising taxes, so there are-

   3. DFDavid Friedberg45:47

      He's raising the corporate tax rate to 28%-

   4. JCJason Calacanis45:49

      But that was, but that was really-

   5. DSDavid Sacks45:50

      ... to any individual.

   6. DFDavid Friedberg45:51

      ... to an individual, yeah.

   7. CPChamath Palihapitiya45:52

      Like, I think raising the corporate tax is a no-brainer. We should absolutely have done that. But David, I mean, Friedberg, back to what you said before, what I would have said is like, look, the, the counter... the counterargument would have been let's take this $620 billion and plan the future. So the plan the future would be, you know, um, why is it that like Elon can, can bore a, a tra- you know, a traffic, uh, bearing tunnel at a million dollars a mile and the next best equivalent is 20 million a mile? Okay, maybe we should give these guys a bunch of contracts and say-

   8. JCJason Calacanis46:24

      Capitalism, yeah.

   9. CPChamath Palihapitiya46:25

      ... well, just... and technology, I would say.

   10. DFDavid Friedberg46:27

       Yeah.

   11. CPChamath Palihapitiya46:27

       And, and less graft and less waste. So let these guys build a bunch of tunnels and maybe they can figure out a way to build bridges too. Or, you know, if you really want to care about like future jobs and the national security of America, let's secure our own precious metals and minerals and let's have an entire supply chain that's, you know, independent of China. Well, you could spend a couple hundred billion dollars on that easily. So there's all kinds of ways to spend it. We could build high-speed rail, you know, in a much sim-

   12. DFDavid Friedberg46:54

       Well, they do have, they do have 580 billion, so almost a quarter, a little over a quarter of this bill going to American manufacturing, R&D, and job training, right? So creating the next generation of jobs for Americans and, and-

   13. JCJason Calacanis47:04

       Yeah, we like that.

   14. DFDavid Friedberg47:04

       ... you know, re- redomesticating industry here.

   15. CPChamath Palihapitiya47:07

       I, I like the free-

   16. JCJason Calacanis47:07

       No, but I mean, honestly, those words sound nice. What are the details?

   17. DSDavid Sacks47:10

       Yeah, exactly. Right, exactly.

   18. JCJason Calacanis47:11

       You got to show us the actual deals.

   19. DSDavid Sacks47:11

       You like the words.

   20. JCJason Calacanis47:12

       Yeah.

   21. DSDavid Sacks47:12

       You like the words. You really think-

   22. CPChamath Palihapitiya47:14

       I love the words.

   23. DSDavid Sacks47:14

       Yeah.

   24. CPChamath Palihapitiya47:14

       Love the words.

   25. JCJason Calacanis47:15

       Great.

   26. DSDavid Sacks47:15

       Yeah.

   27. JCJason Calacanis47:15

       I mean, I like... I mean, one that I think nobody can argue with is universal pre-kindergarten. That's easy. And I think community college tuition being free is a great one as well, if people have a certain score to get in there, so it's a little bit of merit as part of that one.

   28. DSDavid Sacks47:27

       Jason, what, what are these things even... What are these things even doing in an infrastructure bill? I feel like inf-... I, I think Friedberg has a point that, like, infrastructure is like one of the last things that people believe that the government should be spending money on. So now they're just branding anything that they want to do as infrastructure. They're... you know, it's human infrastructure-

   29. JCJason Calacanis47:45

       Yeah, infrastructure is supposed to be bridges and roads.

   30. DSDavid Sacks47:47

       ... social infrastructure, right.
6. 52:59 – 1:05:14

   Trade off between freedom & equality, how free markets spur innovation, generational changes

   1. DSDavid Sacks52:59

      50.

   2. DFDavid Friedberg52:59

      Can I make a case to you guys? I've kind of been thinking about this, but I'd love your, your feedback on it. So I feel like there's a, a trade-off between freedom and equality. Um, and, and what I mean by that is i- if you, if you give, um, a market freedom, a, a market of people doing things freedom, um, you maximize progress that that society achieves. And, and the United States is the best case study of this in history. In 250 years, we went from a bunch of people living on plantations or living on small farms to a, uh, you know, the largest economy in the world. Um, and so the more freedom you, you provide, um, the, the more innovation there is, the more entrepreneurship there is, the more of, um, inventing new stuff there is. The problem with progress, progress takes everyone forward, but progress is always asymmetric. Meaning some people end up in a greater point further ahead than everyone- than a lot of other people do. Whereas like a socialist state with less, um, freedom, you take-

   3. DSDavid Sacks54:00

      And incentives.

   4. DFDavid Friedberg54:01

      You- and incentives. You take everyone forward together, but you don't make as much progress. And so if you wanna have freedom, you have the most amount of progress, but you have the least amount of equality over time. Even though everyone is further ahead than where they started 200 years ago or 100 years ago, or even 10 years ago, everyone's in a better position than say they were some period of time ago because we've all got better social security programs and whatnot. There are some people that get so much farther ahead, like Elon Musk and Jeff Bezos, and these people that you can now look to and say, "This is unfair. This person's taken so much capital and I've only made, you know, a 10% increase in the last 10 years." And so as a result there- in a, in a democracy there's always this tension between freedom and equality. And those are the two things that cycle in terms of what voters vote for. We're coming into a cycle now where we're gonna start to vote down freedom and vote up equality. And this is sort of what the wealth tax, in my mind, represents, is this, this kind of redistribution or this returning to kind of the mean or reversion to the mean in terms of like get everyone back on the same page. But as a result, we're gonna see much less progress economically. We're gonna see much less progress in terms of innovation. And other places that have more freedom and enable more in- innovation and infrastructure, uh, and entrepreneurship are gonna be able to kinda leap ahead and have greater progress than us.... that's my kind of rant and thesis, but I'd love you guys'.

   5. DSDavid Sacks55:22

      I w- I would amend your, your thesis slightly to say that freedom produces prosperity.

   6. DFDavid Friedberg55:27

      Right.

   7. DSDavid Sacks55:28

      And prosperity does produce some inequality because there are always people like Elon or Jeff Bezos or whatever who are just gonna be, like, super producers, especially in the era of technology where you can create a machine to produce goods and services. And that machine can be thousands or, or millions of times as productive as the ordinary person, so they're gonna build extraordinary wealth. But the, the, uh... But look, the, the, the free-... The, the basic idea of liberal society is you have a free enterprise system where people are generally free to create their companies and their businesses, and then you have a social safety net that's paid for by the largesse of that system. And the thing about socialism is it can only make... We talked about this last time. It can only make everyone equally poor. It never makes everyone equally rich. You end up killing the golden goose for everybody, um, and, and you also end up with a lot less freedom because you end up with a gigantic state that exists to level everything, and they accrue all this power for themselves.

   8. CPChamath Palihapitiya56:27

      But is that actually true? Like, if you look at China, is that really what's happened in China? China's kicking everybody's ass and they're basically a socialist.

   9. DFDavid Friedberg56:34

      Well, D- Yeah, this authori-... They're authoritarian.

   10. DSDavid Sacks56:36

       Th- E- Exactly, they're, they're c-

   11. DFDavid Friedberg56:38

       Communist.

   12. DSDavid Sacks56:39

       They're sort of-

   13. DFDavid Friedberg56:39

       Or sort of politically.

   14. CPChamath Palihapitiya56:40

       Maybe using, using Friedberg's language, they don't have as much freedom or that freedom is granted by, you know, uh-

   15. DFDavid Friedberg56:46

       Authority. A central authority.

   16. CPChamath Palihapitiya56:48

       Yeah, a central authority.

   17. DFDavid Friedberg56:48

       Which makes them authoritarian, by definition, which means somebody like Jack Ma can do amazing until he can't.

   18. CPChamath Palihapitiya56:55

       But that's a, but that's a perfect example. He's still doing fine. He's got 50 billion. Maybe he doesn't have 70, but he's got 50.

   19. DFDavid Friedberg56:59

       Right, but imagine what he could do if he could keep going. And, and this is a point-

   20. CPChamath Palihapitiya57:02

       Exactly.

   21. DFDavid Friedberg57:02

       ... I wanted to make, which is what if you got, uh, Elizabeth Warren or Bernie Sanders' proposals enacted? And Bernie Sanders gone on TV many times and said there should be no billionaires. If Jeff Bezos stopped building Amazon when he made a billion dollars because he was forced to by the government, at that point all the future benefit of Amazon would have been lost. It's not like someone else would have been able to step in on top of that platform and build more, and then the next-

   22. CPChamath Palihapitiya57:24

       Nope.

   23. DFDavid Friedberg57:24

       ... guy steps in and makes the next billion. And I, I just wanna remind everyone the, the, the benefits of Amazon are extraordinary. I mean, imagine going back 20 years and being... Or being a kid and I can go on my freaking phone and I can say I want something and it shows up at my door the next day for very little- Or same day. ... for same day for very little money. I mean, it is fucking mind-blowing what Amazon has built for us, for society. It's an incredible business at the same time, and we are all willing to give that business money because the benefit of what they do for us is so extraordinary. And if you had capped Jeff Bezos's wealth or capped his ability to kind of keep elongating what that business could do at some point, it would have been an absolute travesty. And I would argue that even though Jack Ma is doing fine, there are people in China who are limited in terms of what they can do because of the way that that government limits freedom and limits flexibility. And so to me, I'm observing this tension between freedom and equality where equality is becoming such a sticking point for people now that it is far more important than freedom. And as a result, we are gonna start to see these little things creeping in like a wealth tax or a limit on billionaires or all this sort of stuff that ultimately limits the ability for people to kind of push their businesses and elongate, um, uh, progress. And if you looked at the great scientific and technical discoveries of the last 30 years, so many of them came from the United States because of this, this freedom, not from China. And China's certainly done fine, but the, you know- But they're a great photocopy machine and they're great at saying, "Hey, here's some slave labor."

   24. CPChamath Palihapitiya58:50

       The innovation has been here. The innovation has been in the United States.

   25. DFDavid Friedberg58:53

       Yeah.

   26. DSDavid Sacks58:53

       China observed what was working in the US and they realized that they should adopt markets, because markets create prosperity, they create goods, they create services, they create, you know, wealth for their people. So they've embraced markets. And then meanwhile, we're moving away from markets or we have such skepticism of markets. You've got this sort of extreme socialist, sort of Bernie wing, um, of the, of the party that is kind of moving away from markets. It's, it's bizarre, you know? It's just this moment-

   27. DFDavid Friedberg59:22

       But, I mean, and then you just... L- look at the free market in the Amazon example. They demanded a $15 minimum wage. They got the $15 minimum wage, and now they're still attacking Amazon and Jeff Bezos and so it's-

   28. DSDavid Sacks59:34

       Well, I think it-

   29. DFDavid Friedberg59:34

       ... never gonna be enough of them. They wanna see him-

   30. DSDavid Sacks59:37

       That's right.
7. 1:05:14 – 1:10:12

   Is a wealth tax constitutional? Vaccine update

   1. DFDavid Friedberg1:05:14

      Sax, let me ask a philosophical question. Do you think that this, um, kind of speaks to a broad challenge with democracy, as I kind of tried to point out earlier, which is at some point the majority can take things away from the minority by just passing a law by, by voting? And when you make that vote, the majority of people aren't affected, therefore they'll say, "Sure, let me..." I mean, I, I know that, you know, you, you have more background in this than the rest of us, but like, what is the political science principle here on how democracy kind of protects itself from having the majority eat the minority when the minority, you know, o- i- in, in this particular case funds the state's budget, right? And like-

   2. DSDavid Sacks1:05:51

      Right. Well, there's, there's a famous-

   3. DFDavid Friedberg1:05:51

      And the vote- and the voter doesn't see that, yeah.

   4. DSDavid Sacks1:05:53

      There's a, there's a famous line in political philosophy that democracy is not two wolves and a sheep voting on what they're gonna have for dinner, okay? That there's-

   5. DFDavid Friedberg1:06:02

      (laughs)

   6. DSDavid Sacks1:06:02

      ... a concept, there's a concept, um, in addition to democracy of rights, you know, that, that you have rights that the government can't just take away. And so part of the American founding wasn't just sort of the majoritarian machinery of government. It was a preoccupation with, with the rights of individuals and minorities to be protected-

   7. DFDavid Friedberg1:06:22

      Right. Right.

   8. DSDavid Sacks1:06:22

      ... against what majorities would do. That's why we have the Bill of Rights. Um, so yeah, I mean, y- y- y- there have to be rights of individuals that are protectable on some level and I, and I think it's a real constitutional issue whether the wealth tax is even allowed.

   9. CPChamath Palihapitiya1:06:38

      Well, that's, I think-

   10. JCJason Calacanis1:06:38

       And Sax-

   11. CPChamath Palihapitiya1:06:38

       That's, I think, where it's gonna get fought and lost, because the, the clever orator in the Supreme Court will say, "If this, what comes next?" Is it, are we gonna go back and saying, you know, all of a sudden the majority doesn't like certain kinds of other kinds of minorities?

   12. DSDavid Sacks1:06:54

       Yeah, you get-

   13. CPChamath Palihapitiya1:06:54

       Where does the li- and c- and this is-

   14. DFDavid Friedberg1:06:56

       You can't, you can't have a certain kind of car or house.

   15. CPChamath Palihapitiya1:06:57

       You can't have a certain car. "Oh, wait, I actually don't like the tone of the color of your skin." "Oh, wait, religious minorities?" All of a sudden we're back to the 19, you know, 40s and... I just don't think this is gonna pass because it's not, um, justifiable. At the federal level, I do think that you can just basically jack up taxation and do a bunch of other things that, that make it more fair. I'll be honest with you guys. I'm a little torn on this topic, and I'll tell you why. On the one hand, if I had to pay 1.5% a year, I'm like, "Okay, what is the marginal utility of that money for me?" It's basically zero-... so it's not as if I would feel that change of 1.5%. The thing that would upset me more is not having to pay the 1.5%, but then to see it wasted. That would drive me crazy, because then I would think, you know, "I could have bought potable water for, you know, uh, a native Indian tribe in California." I mean, actually here's a perfect example. I just found this out today, you guys will be shocked. There is an incredible shortage of clean water in the Central Valley. There are places today where your and my fellow compatriots of California live, where they have to buy these huge $12 Arrowhead jugs of water, because the water is completely poisoned. And when I heard that yesterday, I thought, "In California? In the United States of America?" And then he said to me, "Chamath, you can give... For two and a half million bucks, you can basically get 5,000 people clean water," through this thing that he's working on. So, for me, the thing that would be upsetting is not paying the 1.5%. It would see... It would be seeing nothing get solved from it. And then, and then what it would really prove is what I said earlier, which is, it's just a bunch of belly-aching from folks that actually just don't know how to actually seek success. And that's a problem.

   16. DFDavid Friedberg1:08:45

       The good thing, Chamath, is that you can run for the Governor of the State of California and fix that fucking problem.

   17. NANarrator1:08:50

       Hey. Well, that's a... (laughs)

   18. CPChamath Palihapitiya1:08:51

       (laughs) But, I mean-

   19. DFDavid Friedberg1:08:51

       We should build a website. (laughs)

   20. CPChamath Palihapitiya1:08:53

       Yeah. (laughs)

   21. DFDavid Friedberg1:08:53

       That is the benefit of democracy is, you, you know, you can kind of run and you can step in and you can help solve these problems-

   22. NANarrator1:08:58

       Or...

   23. DFDavid Friedberg1:08:58

       ... at the government level. But, um...

   24. NANarrator1:08:59

       We could start a podcast and try to use-

   25. DFDavid Friedberg1:09:00

       Yes.

   26. NANarrator1:09:00

       ... our influence, or we could donate-

   27. CPChamath Palihapitiya1:09:02

       I-

   28. NANarrator1:09:02

       ... to things.

   29. CPChamath Palihapitiya1:09:02

       Guys, I'll say something else. I also think that these kinds of bills are actually a shot across the bow to a handful of people that are not playing by the rules anymore. We're not towing the line and standing in line and saying, "I'm clearly demarcating myself as a Democrat. I'm clearly demarcating myself as a Republican. I'll play nice." Because think of what's really happened in, in, in COVID. You've had a massive explosion in D2C distribution, right? Think of the platform that we've created out of nothing. Think of the platform that Elon Musk has out of nothing. And if you, if you take that ri- large, it's extremely disruptive to people who... It's all about controlling the message which allows them to control power. And I think that a lot of these rules are these ways of almost, like, counter-punching against it, but they're ineffective. I... What I would encourage all of us to do is actually become completely zen, and instead continue to aggregate distribution power. Because that will replace the 1.5% tax that you have to pay. Because if you can talk to people directly and tell them your version of the truth and allow them to underwrite their version of the truth against what you said, that is modern power. And that's worth a lot more than the money that you'll pay.

Episode duration: 1:20:57