E88: First principle politics, China chaos & outlook, state of private/public markets & more

Chamath Palihapitiya 0:00 Two days ago...

Jason Calacanis 0:02 Oh, here we go.

Chamath Palihapitiya 0:03 In the piazzetta, I got into a fight.

Jason Calacanis 0:06 You got into a fight?

Chamath Palihapitiya 0:07 I got into a fight.

Jason Calacanis 0:08 Like, a physical altercation?

Chamath Palihapitiya 0:10 A physical altercation.

Jason Calacanis 0:11 Really?

Chamath Palihapitiya 0:12 This chick shows up wearing a white wife beater, talking all kinds of shit. And I said, "Listen, lady, you zip it." And she just kept jawing and jawing, and here she is again, she's back for more. And so I was like-

Jason Calacanis 0:28 Aw.

Chamath Palihapitiya 0:28 ... "Listen!"

Jason Calacanis 0:29 (laughs)

Chamath Palihapitiya 0:29 Now, have you ever seen-

Jason Calacanis 0:30 Aw, there she is.

Chamath Palihapitiya 0:30 Have you ever seen a, a one, a onesie wife beater?

Jason Calacanis 0:34 Look at that little sweetie. Aw.

Chamath Palihapitiya 0:35 (sweet baby voice) I'm just gonna look at you. I'm just, you should sit there, and then you just sit there. And then, look. And then you can just say hi to everybody.

Jason Calacanis 0:41 There's your cold open, everybody. That's the good stuff, right there.

Chamath Palihapitiya 0:43 Say hi to everybody. I know I'm not a beagle. I know I'm not a beagle, but I'm even better, I have my own thoughts.

Jason Calacanis 0:49 Sacks, what you're seeing here is called affection between a parent and a child.

David Sacks 0:54 Just let me know when it's over. Just let me know when it's over. (laughing)

David Friedberg 0:59 You're the worst. You're the worst human being in the world.

David Sacks 1:03 I don't need to watch Chamath boost his Q rating by using his kids as props, okay?

Jason Calacanis 1:10 Oh, Friedberg, where's your puppy that you saved from being tortured with Kim Kardashian's lip gloss?

David Sacks 1:18 (laughs)

David Friedberg 1:18 Nick, we gotta get this guy in 'cause he hasn't been in the show in a while. There he is, there he is.

Jason Calacanis 1:23 Aw, Monty. Aw, your belly rub.

David Sacks 1:26 Get the props outta the shot.

David Friedberg 1:28 (upbeat music) I'm going all in. Don't let your winners ride. Rain man, David Sacks. I'm 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. I'm going all in.

David Friedberg 1:45 Sacks, what's up with, uh, JD Vance in Ohio? Is he gonna pull this thing off, or is he getting beat up? I read an article about him getting beat up, uh, with the Peter Thiel connection being...

Chamath Palihapitiya 1:55 He got physically beat up?

David Friedberg 1:57 No, no, no. Like, in the polls.

Jason Calacanis 1:58 No, no, no, no.

David Sacks 1:58 No, I think JD should win.

David Friedberg 2:00 He's gonna win, right?

David Sacks 2:01 Yeah, I think so.

Jason Calacanis 2:02 And what about Blake Masters? These, these are the two guys that Thiel is backing.

David Friedberg 2:06 Should we start the show?

Jason Calacanis 2:07 We kinda did, yeah.

Chamath Palihapitiya 2:08 Can I just ask you a question? If any of us entered porn, wouldn't one of our names be Blake Masters? Like, it's just, wouldn't it be on the list?

Jason Calacanis 2:18 (laughs)

Chamath Palihapitiya 2:18 Like, doesn't it sound like a great-

Jason Calacanis 2:19 I'm kidding. I've seen it.

Chamath Palihapitiya 2:20 Isn't it a great name for porn?

Jason Calacanis 2:22 It's a great name, Blake Masters.

Chamath Palihapitiya 2:23 It's a great name.

Jason Calacanis 2:25 And, and JD Steel, I'm sorry, Vance. Yeah, go ahead. Explain what's going on with this, uh, Manchurian candidate.

David Sacks 2:30 JD, what, what'd you, what'd you, what'd you accuse him of without any evidence? What, what'd you say?

Jason Calacanis 2:33 I'm not accusing anybody of anything. I'm just saying, t- tell us about your Manchurian candidates. Go ahead. (laughing)

David Sacks 2:39 Well, so JD's already won the primaries.

Jason Calacanis 2:42 Got it.

David Sacks 2:42 And I expect he will win. I mean, it's gonna be, I think, a red wave in November, and Ohio is a pretty red state these days. Blake still has to win the primary in Arizona. It's a little bit more of a toss-up, but I think he'll do well.

Jason Calacanis 2:57 All right. Well, I had a followup question, but I'm, I'm not allowed to mention the T-word, so let's just get started.

David Sacks 3:01 Why is it such a big deal that, like, Peter supports candidates? You got all these-

Jason Calacanis 3:04 Yeah.

David Sacks 3:04 ... like, crazy left-wing radicals-

Jason Calacanis 3:05 No, no, I think it's interesting.

David Sacks 3:06 ... like Soros gives unlimited amounts of money to, you know, crazy progressives, like Gascon in LA and a zillion others. I mean, why, why is it such an obsession that we have to focus on who Peter supports?

Jason Calacanis 3:17 No, no, I just think it's fascinating that he...

David Friedberg 3:19 Peter's articulated his rationale-

Jason Calacanis 3:21 Yeah.

David Friedberg 3:21 ... for supporting these candidates and his objective for f- you know, changing government in a way that he thinks would benefit the country.

Chamath Palihapitiya 3:27 And Peter's been generally right.

Jason Calacanis 3:29 What is the thesis, Friedberg?

David Friedberg 3:30 I think a part of... If you watch his speech from the, um, RNC during the, the last Trump cycle-

Jason Calacanis 3:36 Yeah.

David Friedberg 3:36 ... I think he did a good job kind of articulating that there's a lot of inefficiencies in government, and there's a lot of, um, call it accumulated fat. And we need someone to go in, and we need people to go in and really cut this up because so much of politics is driven by what else I'm gonna give you, not about what I'm gonna fix that's already being spent in, in a, in an inefficient way. And as a result, we see debt climb, we see taxes climb. We see efficiency continue to decline of every dollar invested by the government, and I think that's a really important thesis to see someone actually try and execute against, 'cause no one's in the posi-

Chamath Palihapitiya 4:05 More precisely-

David Friedberg 4:06 Very few people are in the position that he's in to actually be able to, like, make that sort of statement. Everyone wants something more from their government versus trying to fix the government.

Chamath Palihapitiya 4:15 I think his views are more extreme than that. I think his views are more that orthodoxy is ruining America, and so you need forms of heterodoxy to basically reset-

David Friedberg 4:24 Totally fair.

Chamath Palihapitiya 4:25 ... uh, the status quo.

David Friedberg 4:26 Yeah.

Chamath Palihapitiya 4:26 And I, and I think that's what he believes more than what you just said. I think that y- y- you need a wholesale reset. And in order to have a wholesale reset, you need to have these very disruptive candidates that basically start to change the norms. I mean, if you, if you think about what Trump did in one election cycle, is he's completely sucked an entire cohort of people, Hispanics and, you know, moderates and now, um, you know, a lot of immigrants, towards the right because the Democrats have vacated all of that space in having this massive Trump derangement syndrome and tacking extremely to the left. And e- even if Peter, we'll never know, believed in Trump or didn't believe in Trump, it didn't matter. But the process of him getting that candidate elected over the long arc of history may actually serve to pull America back to the center. Pretty good outcome.

David Sacks 5:20 Yeah, and look, the, the reason why I support JD, and Blake for that matter, is they are... They represent this more populist, working-class wing of the Republican Party. They're dragging the Republican Party at a more working-class direction. I think that's the future of the party. I think that's the opportunity for the party. To Chamath's point, the Democrats have ceded all the sort of this working-class territory by becoming this elite progressive party. And the face of the party right now, the Democratic Party, is Paul Pelosi. You know, let's talk about this. It's blatant and out in the open. He's trading on chip stocks, like Nvidia and Intel and so forth. Like, the week before the House is gonna vote on a $52 billion subsidy for chip companies...

Chamath Palihapitiya 5:59 No, no, no, be more precise. The week before his wife decides (laughing) when critical legislation goes to the floor of the House to be voted upon.So you have the Speaker of the House, who's the third most important person in government, introducing legislation on her timetable. Her husband trades in those specific equities days and maybe even the same day-

Jason Calacanis 6:24 So gross.

Chamath Palihapitiya 6:25 ... of that. They make three times her annual salary just in one day, and then she and her husband decide to then fly, not asked by the United States government or the State Department, to Taiwan to then talk about God knows what, which would have created an international uproar. The Biden administration and Tony Blinken had to basically call her and say, "Stand down. You should not go. We are not asking you to go. It is not on the United States agenda for you to go." And all that would have happened is an entire process and loop where she controls the legislative agenda, her husband controls their private stock account, and he-

Jason Calacanis 7:09 It's such a gra-

Chamath Palihapitiya 7:10 ... traffics in the names-

Jason Calacanis 7:11 Yeah.

Chamath Palihapitiya 7:11 ... and then they go to Taiwan to whip up the furor, which would have actually positively impacted those same names even more. It's inexcusable, that kind of behavior. I mean, after 40 years-

Jason Calacanis 7:20 L- let me, um, just tell people-

Chamath Palihapitiya 7:20 ... she is so past the line and she doesn't realize it. And by the way, sorry, let me just... Wait, hold on. And then on top of that, Jason, the mainstream media doesn't say shit. Now, by the way, I'm not a Trump supporter, I think he's a complete goofball, but if Trump had tried to pull this stuff in 2016 or 2017 or 2018, could you imagine how much media coverage there would be? And today, how much of that is covered by the mainstream media? Zero. Was it mentioned on MSNBC? Nope. Was it-

Jason Calacanis 7:50 Yeah, so just sa-

Chamath Palihapitiya 7:50 ... mentioned in any of the press? Nope.

Jason Calacanis 7:53 Let me just set the stage so people who don't know what we're talking about. So, uh, on Tuesday, the Senate advanced a slimmed down version of the original CHIPS bill, if you don't know what that is. It's basically a bill that's going to provide $52 billion in subsidies to move chip manufacturing here to the United States, something we really need to do. It's a bipartisan bill. Everybody kind of agrees on this. Um, but this is being kind of stuck in committee for a little bit. Uh, it comes a year after the Senate first approved the $250 billion bill to reinforce US chip making to compete with China.

David Sacks 8:23 The reason why this is strategically important is because we have a huge chip dependency on Taiwan-

Jason Calacanis 8:28 Yes.

David Sacks 8:28 ... which is under threat from China. So if chips are the new oil, you know, Taiwan is the new Middle East or the new Persian Gulf, and it is a very dangerous situation for us to be completely dependent on Taiwan. Well, not completely, but, like, for over half our chips. So onshoring, uh, advanced chip manufacturing makes sense. But I think this is an example of how you t- you start with a legitimate objective in Washington, and very rapidly, it turns into corporate welfare and graft by politicians. I mean-

Jason Calacanis 8:58 Yeah, it's gross.

David Sacks 8:59 Yeah. I mean, just because we need to onshore manufacturing doesn't mean that you give Intel and Nvidia giant handouts. And then you got Paul Pelosi making millions trading Nvidia options.

Jason Calacanis 9:08 Yeah.

David Sacks 9:08 It's, it's ridiculous.

Jason Calacanis 9:08 And this is something that is happening-

David Friedberg 9:10 What would you have done, Sax? To support onshoring of semiconductor manufacturing, who would you give the money to and how would it be kind of dolled out, and what would the terms of it be?

David Sacks 9:19 I don't know that you just give these companies money. I mean, I think maybe what you do is you give them tax breaks or various kinds of breaks, but, um, I, you know, I don't like the idea of just-

David Friedberg 9:28 But they need capital. They need capital to support that investment because, you know, if you look at the, um, kind of ROIC on these companies, I would... I haven't looked, but I'm guessing they're in the high teens or something, mid to high teens, and they're not going to be able to invest in some newfangled, you know, fab project that may or may not actually have customers at the end of the day. Their, their board would never approve that on an independent basis. They need capital-

Jason Calacanis 9:50 Define ROIC, Friedberg.

David Friedberg 9:51 Return On Invested Capital. So if you're a big industrial business, you know, one of the key metrics that your shareholders look at is the, the, the ultimate kind of profit, uh, profits that are generated from a big investment you might make. And so, you know, you kind of look at that over time, you look at the invested money over time and the cash, uh, returned over time, and you come up with this metric. And so it's a key metric for particularly capital-intensive businesses. And so a business like Intel or Nvidia, I would imagine, is going to have a pretty tough time selling their board on some speculative onshoring fab project. Th- there really does need to be capital and acceleration of capital-

Chamath Palihapitiya 10:26 Friedberg, who, who feeds you this bullshit propaganda? Intel, in 2020, approved a share purchase plan where these guys had a hold of $110 billion and have spent all of it except for 7.2 billion. They have six billion left on the balance sheet.

David Friedberg 10:44 I get it-

Chamath Palihapitiya 10:44 So-

David Friedberg 10:44 ... but they're not going to put that money at risk, right? Like, like, Chamath, imagine you're on the board of Intel and they're like, "Hey, we want to own it."

Chamath Palihapitiya 10:50 So the government... Okay, so basically, hold on-

David Friedberg 10:52 But that's the basis of where this-

Chamath Palihapitiya 10:52 ... I make a ton of money-

David Friedberg 10:54 Yeah, this is where it all comes from, right? Yeah.

Chamath Palihapitiya 10:55 ... I make a ton of money. I have no better ideas of how to do it, including theoretically building a chip factory, so I'm going to go to the government for a handout. Meanwhile, I'm going to take all the money that I had, which I could have used to fund this thing, and I'm going to give it away to people who I don't know what they're going to do with it.

David Friedberg 11:12 I would reframe it. I would say that the government wants to see our industry, onshore semiconductor manufacturing, and they are going to the companies, not the company's going to the government. They're saying, "We want you to onshore semiconductor manufacturing, do that for us now." Like in World War II, we went to the automobile manufacturers and said, the government said, "We want you to make airplanes. Here's a bunch of money, make airplanes." And that's, and so the question then is-

Chamath Palihapitiya 11:35 But, but you do know... But-

David Friedberg 11:35 ... who does that money go t-

David Sacks 11:36 But what David-

David Friedberg 11:37 Who, who else would you give that money to besides the two best chip makers in the world-

Chamath Palihapitiya 11:40 No, no. David's right.

David Friedberg 11:41 ... that are vote-based?

Chamath Palihapitiya 11:41 If you just give a s- a CapEx subsidy, that's a one-time effect that helps you in a moment. It doesn't help your business. Any reasonable investor who can actually use a simple calculator sees through that nonsense. So what David's right is if you had given them sustained tax breaks for being able to build the business line that then supplies things for the duration, you know, tens of years, you're absolutely right. Investors would laud it. It would make a ton of sense. They would be overearning-... over a long enough period of time where people would have to bake that into their cash flow estimates, where when you discounted it back, it would make the enterprise of Intel and NVIDIA worth more, and then people would then wanna own that stock more. Giving a CapEx subsidy is a meaningless way in which you basically hand out good money to organizations who have otherwise misallocated the money that they've already had.

Jason Calacanis 12:36 Yeah, there's a much simpler solution to, to Sax's point of like how do you do this, and, uh, giving free money is not the way to do it. The best way to do it is to give an incredibly low interest rate loan, like a 30, 40, 50 year loan, uh, that maybe re- has some warrants in it, just like a, you know, a Silicon Valley Bank or a Comerica might give in a venture debt loan, where the government actually could make money from this. And then you incent them with something that is ex- just too good not to take, a 50-year loan of $5 billion to build factories. You have to use it for that, so it's use it or lose it, and then you slowly pay the government back, and then maybe we get some warrants in Intel or whoever you give the money to. This is something that Obama did with Solyndra, Solyndra which didn't work out, but he also did it with Tesla, and Tesla paid all that money back early. So these loans that the Department of Energy did really did, um... and, and you gotta give Barack Obama a lot of credit for this, it really did help drive, even though it wasn't perfect-

Chamath Palihapitiya 13:32 So by the way, when, when-

Jason Calacanis 13:33 ... it did drive a lot of EV ad- adoption and it did really help Tesla become the company it is today.

David Friedberg 13:39 Sorry, let me just respond 'cause I, you know, I- I don't know how m- much we've, we've gone through the details of the bill, but (gavel bangs) the- there are several components to this bill, including, uh, and, and I just wanna highlight, if I'm, uh, on the board of Intel, I'm not gonna make a $10 billion fab investment, um, because, you know, there's n- there may or may not be, you know, profits down the road to justify that size of an investment. So if the government comes along and says, "We will support, we will cover X percent of that investment," I can take on more risk and I'm more willing to make that investment. And theoretically, I can afford to pay people a higher wage or a higher salary because I now have more capital freed up to support to do that. And so there is an effect that, that arises by having the government come in, put some money into these projects, accelerate their outcomes, and it gives the, the business more freedom.

Jason Calacanis 14:26 But should it be, Freeberg, free money or in the form of a loan? So what should the financial device be, I think is the question that you asked Sax, if I'm interpreting correctly.

David Friedberg 14:34 Yeah, I'm not sure that the loan... 'cause the loan doesn't resolve the fact that they're having to put up money, right? And so th- they're not necessarily gonna make this onshoring investment. The, the, the rational capitalist decision is to offshore manufacturing for Intel.

Jason Calacanis 14:47 Yes.

David Friedberg 14:47 It is irrational for them from a business perspective, from a board perspective, from a fiduciary perspective to onshore manufacturing.

Jason Calacanis 14:54 Correct.

David Friedberg 14:54 So the reason they're gonna do it is not because they're getting a loan where the interest rate is low. That doesn't really solve the problem. It's the government saying, "We're gonna put a $10 billion facility. We want you to build it and manage it for us." And that's effectively what's happening. And now by building this $10 billion facility, we've created security for the rest of the US industry. It's worth it to the government to put that money up.

Chamath Palihapitiya 15:13 No, it won't. No, it won't.

David Friedberg 15:13 It creates security for our economy.

Jason Calacanis 15:16 Wait, why wouldn't it create security? If we, if we have more onshoring of chips-

David Friedberg 15:20 And by the way, the... a- and, sorry, I'll say one more thing.

Jason Calacanis 15:22 ... then that creates more security.

David Friedberg 15:22 There's also an investment tax credit built into this bill, Sax, which does provide over time a bunch of incentives to continue to support and drive the onshoring work that's proposed in the bill.

Chamath Palihapitiya 15:32 If you want the United States-

David Sacks 15:33 Point of personal privilege, can I request that Chamath, uh, add just one button to his shirt?

David Friedberg 15:38 Yeah, please.

Chamath Palihapitiya 15:39 (laughs)

David Sacks 15:41 But... (laughs)

Jason Calacanis 15:41 Is it too distracting for you? (laughs) You can't take your eye off the glare, the glare?

Chamath Palihapitiya 15:46 You can just use the wide view. You can wide view your... oh, geez.

David Friedberg 15:49 There it is.

David Sacks 15:49 First I had to watch Jason do the gun show. Now I gotta watch Chamath, you know?

Jason Calacanis 15:53 Show us your guns. Come on, pull up that sleeve-

David Sacks 15:55 (laughs)

Jason Calacanis 15:55 ... and show us what you

Guest 15:56 All right, let's move on.

Jason Calacanis 15:56 ... what old man arm you got.

Guest 15:57 Let's move on.

David Friedberg 15:58 I wanna say one more thing about the Pelosi stuff. So here's the data. I don't know if you guys have looked at the full history of the Pelosi trading data. Here's the link.

Jason Calacanis 16:05 Oh, she's so good at it.

David Friedberg 16:05 This is all the trading that's happened over the last couple years.

Jason Calacanis 16:08 So good.

David Friedberg 16:08 And, um, over the past year, he has bought NVIDIA four different times, each time in the same kind of volume range. So the timing certainly may appear suspect, and it's certainly a terrible kinda thing to see. He's also bought Apple in the last month. Microsoft... sorry, he sold Apple. He bought Microsoft. Um, he bought AllianceBernstein earlier in the year. He's made a few trades this year, but NVIDIA he's actually bought on four different occasions over the past 12 months. Um, for whatever that's worth, right? I'm not, not trying to defend it, but I think we should be intellectually honest about the fact that this guy, you know, does take points of view in certain companies. He trades in-

Jason Calacanis 16:43 Can you...

David Friedberg 16:43 ... a handful of companies and he bought, uh, NVIDIA.

Chamath Palihapitiya 16:44 Are we, are we willing to be intellectually honest enough to think that a husband talks to his wife and vice versa?

David Friedberg 16:51 Yeah.

Chamath Palihapitiya 16:51 Or does that not happen anymore?

David Friedberg 16:53 Depends on the husband and wife, but yeah. (laughs)

David Sacks 16:55 I think this is blatant and out in the open. I mean, it looks really... at, at a minimum, the appearance-

David Friedberg 17:00 It looks bad.

David Sacks 17:00 ... is of graft and corruption and-

Jason Calacanis 17:02 Yeah, the appearance of impropriety is impropriety. They shouldn't be allowed to trade. They should have to put their stuff into blind trusts, or they should maybe trade once a year, and they should have to announce their trades before the trades happen. "Hey, here's what I'm planning on doing," just like a CEO is planning on doing this stuff. It, it's ridiculous that they can do this. And if you wanna-

Chamath Palihapitiya 17:19 Why doesn't the mainstream media cover this?

Jason Calacanis 17:22 They have, but it's not-

Chamath Palihapitiya 17:23 And Jason, and Jason, do you think-

Jason Calacanis 17:24 Uh, they have-

Chamath Palihapitiya 17:24 ... do you think that if Trump... if it, this had happened during Trump, it, we, it would have a lot more coverage than this Pelosi incident?

David Friedberg 17:29 I do remember a lot of coverage on Trump.

David Sacks 17:31 It really doesn't get covered. I mean, if you just search for it today, you'll see basically the only media outlets covering it are, like, Fox News and then, uh, Zero Hedge. You know, that's it. I mean, that's how I found out about it is, like, the Zero Hedge tweets about it.

Chamath Palihapitiya 17:45 Me too.

Jason Calacanis 17:45 So Daily Beast, you know, headline-

David Sacks 17:47 You can go digging, but-

Jason Calacanis 17:48 ... seven hours ago, "Dems quietly try to jam Pelosi on stock trading ban." But if you're asking me, you ask me a question, Chamath, i- is the, uh, media largely biased against Trump and gives a free pass to the Dems? Yes, I would say that that is the trend, yes. 100%.

Chamath Palihapitiya 18:03 I think that is intellectually honest of you.

Jason Calacanis 18:05 Well, no, I- I mean, I think the media is bankrupt. They're just going for clicks. And I think, you know, we've talked about this before. They saw Trump as an existential risk, and they just did whatever it took to get him out of office, um, even putting-

Chamath Palihapitiya 18:16 But in doing so-

Jason Calacanis 18:17 ... Biden as the candidate.

Chamath Palihapitiya 18:17 ... they completely burned all of their credibility.

Jason Calacanis 18:19 Absolutely. They lost a lot of credibility.

Chamath Palihapitiya 18:21 And now, and now-

Jason Calacanis 18:21 Agreed.

Chamath Palihapitiya 18:21 ... the Dems are starting to become increasingly...... detached, and out of touch, and maybe hated. But then the result is that the mainstream media is just no longer trusted.

David Sacks 18:30 The media and the Democratic Party both have the same problem, which is they suffer from what, um, the Democratic political scientist, Roy Teixeira, has called, uh, professional class hegemony. I mean, th- they are populated by college graduates with degrees who basically have this, uh, very elitist progressive agenda. And that is what is causing the Democratic, the working class to defect from the Democratic Party, their historical base, in droves. Look at Hispanics. Well, first of all, if you go to the r- latest Biden polling numbers, he's down to 31% approval, 60% disapprove. Okay, so the trend is getting worse there. But you look at Hispanics, it's down to 19% approval, 70% disapproval. It's an even more intense version of the same problem. You had, um, Mayra Flores get elected in that Texas seat. This is a district that went... It's basically a predominantly Mexican American district. They went for Biden by 18 points just, uh, you know, two years ago, and now they're voting for her by over 10 points. So, you have Republicans winning that seat for the first time. So you have these huge defections. Now, why, why is that happening? Because the Democrats are appealing to the donor class on issues like border, on issues like crime, and on issues like CRT in schools. I mean, th- you know, the working class people in this country, they don't want open borders, they want crime to be prosecuted and cracked down on.

Chamath Palihapitiya 19:57 Yep.

David Sacks 19:57 And they do not want an ideological education for their kids, okay? It's very simple. But that basically is why the Democratic Party is losing, losing votes. Now, let me give you a couple other examples of the Democrats cynically appealing to this sort of donor class. So e- e- recently, there was an article about the Democrats have spent $44 million this election cycle basically running ads in favor of the crazy MAGA candidate in primaries. There's been a bunch of reports of this where, in competitive Republican primaries, the Democrats will actually spend money on behalf of the, sort of the more perceived crazy Republican, the MAGA candidate-

Chamath Palihapitiya 20:35 The crazy Trump, the MAGA candidate.

David Sacks 20:36 ... the election denier and so forth-

Chamath Palihapitiya 20:38 Yeah.

David Sacks 20:38 ... because of the perception that they'll be easier to beat in the general. But I think this is a case of be careful what you wish for because, y- you know, if we have a red wave in November, you're gonna end up with more of these candidates basically winning. So it's a very cynical strategy. The other e- example I think of a very cynical strategy is you saw there was a vote in the House this past week on gay marriage, and the House voted to repeal DOMA, the Defense of Marriage Act, in support... Basically codify Obergefell, right? The Supreme Court's decision on, on, uh, gay marriage. Something like, you know, 60 Republicans voted for it. Look, I would have liked to have seen more Republicans vote for this. I think it should be like, you know, a majority of the Republican Party should be voting for this. But the point is that is there any intention of the Democrats to bring this up in the Senate and pass it and codify Obergefell when they have a chance? I think the answer is no. Why? Because the Democrats would rather fundraise off this issue. The same thing was true about Roe. The Democrats had super majorities in the Senate under Obama. They could have codified Roe. They never took the chance. Why? Because they would rather fundraise off this issue from progressive elites, the donor class in California and New York. So this is why they're not gonna codify-

David Friedberg 21:53 You really think that's the case?

David Sacks 21:54 ... Obergefell. Absolutely.

Chamath Palihapitiya 21:55 Obama said it on, on the record. Obama was asked, "Why will you not..." He campaigned on codifying Roe v. Wade, and then very quickly into it, he was asked when he had the supermajority in both the House and the Senate, "Will you act on Roe v. Wade?" He goes, "No, it is not a priority anymore." That's a quote.

David Sacks 22:12 It absolutely could have been codified, just like Obergefell could be codified tomorrow.

David Friedberg 22:16 Zamok, do you think-

David Sacks 22:16 The Senate could... But look, there are...

David Friedberg 22:17 Yeah.

David Sacks 22:17 There are 10 Republican votes. There are 10 Republican votes at least for this in the Senate. You have a s- a filibuster-proof supermajority in the Senate who would support this. The same Republicans who supported the gun r- restriction bill that Biden just signed and that supported the infrastructure bill.

David Friedberg 22:34 You think they could codify abortion rights in this country right now if they wanted to?

David Sacks 22:37 No, no, no, no, no. That, that moment has passed. That moment's passed. I'm not saying-

David Friedberg 22:40 Republicans would never give women the right, no.

David Sacks 22:42 No, no, no. Look, there's not a supermajority in-

David Friedberg 22:44 Issues.

David Sacks 22:44 ... the Senate anymore for, uh, for codifying Roe. There is a supermajority right now for codifying Obergefell.

David Friedberg 22:50 Oh, really?

David Sacks 22:50 They could do that right now, and they're not.

David Friedberg 22:52 Zamok, you've been a donor to the Democratic Party. Did you believe that-

Chamath Palihapitiya 22:56 Millions. Millions.

David Friedberg 22:56 Yeah. Do you, do you believe that the, um, the abortion issue drove you and others to put more money in, and that maybe not kind of-

Chamath Palihapitiya 23:04 Well, no, because, because the leadership of the Democratic Party focused on, uh, Trump in the last big cycle. It was all Trump, Trump, Trump, Trump, Trump. Do I think that more grassroots fundraising focuses on that or gun rights or abortions?

David Friedberg 23:21 But do you think what Sachs is saying is true-

Chamath Palihapitiya 23:22 Yeah.

David Friedberg 23:22 ... that they actually held off on trying to codify Roe so that they could continue to support fundraising efforts?

Chamath Palihapitiya 23:26 Again, I'm just, I'm just gonna give you the quote because it... Th- there's, there's no opinion needed. Okay. April 29th of 2009, President Barack Obama says on Wednesday he favored abortion rights for women, but that passing a law guaranteeing these rights were not his tru- top priority. "I believe that women should have the right to choose," Obama told a news conference marking his first 100 days in office." Again, when he had supermajorities in both the House and the Senate. "But I think that the most important thing we can do to tamp down some of the anger surrounding this issue is to focus on those areas we can agree on." So, you make a promise, you get into the seat of power, you have the decision on what your legislative agenda should be, and he made that calculation. And David is right, sadly, that it wasn't a moment where we had a clear line of sight to codifying many of these rights.

David Friedberg 24:17 Yeah. But the question, Friedberg, that's the... Hold on, hold on, hold on.

David Sacks 24:19 But, but, but putting aside-

David Friedberg 24:20 That's not the question that Friedberg is asking. He's saying, do you think that they specifically did this to keep it as an open issue to raise money off it? I don't think that's believable.

David Sacks 24:28 Oh, yeah. Absolutely.

David Friedberg 24:28 No way. No way. And I, I, I, I...

David Sacks 24:30 Absolutely, because-

David Friedberg 24:30 If you want to talk about cynicism, Sachs, the truly cynical move was...

Jason Calacanis 24:34 ... you know, Trump saying, "I am going to get this in- evangelical vote to win the primaries, to get those 20% who wanna take away the right for women to have an abortion, and I'm gonna stack the Supreme Court to actually achieve that goal."

Chamath Palihapitiya 24:47 I think he-

David Sacks 24:47 No, no, no, hold on a second.

Jason Calacanis 24:48 That's the most cynical-

David Sacks 24:48 Let, let, let's define terms.

Jason Calacanis 24:49 ... of all of this political stuff.

Chamath Palihapitiya 24:50 All right, let's ask Jason.

David Sacks 24:50 Okay, let's, let's, let's define terms.

Jason Calacanis 24:51 If you wanna go political and cynical.

David Sacks 24:53 No, hold on a second, hold on a second. Let, let's define terms. So, you may be opposed to what Trump did, but there wasn't s- that wasn't cynical. He stated what he was gonna do when-

Jason Calacanis 25:01 Yes.

David Sacks 25:01 ... he ran for office, and then he did it. He lived up to his promise.

Jason Calacanis 25:04 Yeah, but somebody who-

David Sacks 25:05 You may hate, you may hate what he did-

Jason Calacanis 25:05 ... he did not believe in that. He did not believe in that. He did it specifically to get those votes. We all know he didn't believe in it. We all know-

David Sacks 25:11 But he-

Jason Calacanis 25:11 ... he believes in a woman's right to choose.

Chamath Palihapitiya 25:13 Jason, he, he created a platform to get elected.

Jason Calacanis 25:16 Yes. That's what I'm saying. That's cynicism. Yeah.

Chamath Palihapitiya 25:17 And then when he was elected, he executed on that platform.

Jason Calacanis 25:20 Yes, that's cynical. Yeah.

Chamath Palihapitiya 25:20 I think what David Sacks is saying is Obama had a platform to get him elected, and when Obama chose, had the choice, he chose to not execute on the platform, and that is also true. And all I'm just saying is, we owe it to ourselves to be intellectually honest about what happened.

Jason Calacanis 25:35 Mm-hmm.

Chamath Palihapitiya 25:35 That is what happened. Okay?

Jason Calacanis 25:37 Right.

Chamath Palihapitiya 25:37 Both of these two guys made claims-

David Sacks 25:39 And-

Chamath Palihapitiya 25:39 Hold on one second. Both of these two guys-

Jason Calacanis 25:41 Yeah, but cynicism is-

Chamath Palihapitiya 25:41 ... made claims-

Jason Calacanis 25:41 ... acting in your own self-interest.

Chamath Palihapitiya 25:43 Okay, I understand.

Jason Calacanis 25:43 And that is what Trump did.

Chamath Palihapitiya 25:44 But Jason, please, I want this on the record.

Jason Calacanis 25:46 Go ahead.

Chamath Palihapitiya 25:46 Both of these two guys made claims to become president. It turns out that Trump actually did execute on most of his claims, as abhorrent as they were to some.

Jason Calacanis 25:54 Yeah.

Chamath Palihapitiya 25:54 And Obama, on some of the most important issues of our j- time, did not.

David Sacks 25:58 Look, what Trump did was just simple coalition politics. He thought it was important to win the religious right. He basically appealed to them. He said-

Jason Calacanis 26:05 Yeah.

David Sacks 26:05 ... that, "If you vote for me, I will nominate these judges-

Jason Calacanis 26:08 And then he represented their interests.

David Sacks 26:08 ... against its office." He delivered. He delivered. That's it.

Jason Calacanis 26:10 And he didn't believe in it himself, right? So that's what I'm talking about.

Chamath Palihapitiya 26:13 Jason Calac. It doesn't matter. It doesn't matter.

David Sacks 26:13 At a certain point, it doesn't matter. It's not cynical.

Jason Calacanis 26:15 Well, it matters to me. I believe people should have per- should have principles.

David Sacks 26:17 Okay, look. You're, you're, you're, you're objecting-

Jason Calacanis 26:18 So I know it doesn't matter to you that he doesn't have principles, but I- it matters to me that people have principles.

Chamath Palihapitiya 26:21 Okay, but Jason, what does it-

David Sacks 26:22 You're objecting-

Chamath Palihapitiya 26:22 ... mean to have the principle of saying that he's going to imp- he's going to pass and codify Roe v. Wade and not do it? What is that then?

Jason Calacanis 26:29 I think he, uh, well, listen. I, I, the quote you gave doesn't give why he didn't do it. He didn't make it a priority.

Chamath Palihapitiya 26:34 He did.

Jason Calacanis 26:34 It could also... Hold on, let me finish. It could also b- be that he believed that it would not get overturned, so he should spend his time on Obamacare and other things. I'm saying cynicism is when you believe one thing and then you do something to act in your own self-interest, and that's what I think.

Chamath Palihapitiya 26:49 I think that's off key. I don't think it's as much-

Jason Calacanis 26:49 And that's what I think Trump did.

David Sacks 26:50 Hold on a second. We don't need to go back all the way to the Obama administration 'cause the issue I'm talking about today-

Jason Calacanis 26:56 Yeah.

David Sacks 26:56 ... is that in the past week, they had a vote codifying Obergefell on gay marriage and, uh, repealing DOMA. Okay?

Jason Calacanis 27:03 Right.

David Sacks 27:04 So, now, listen. I actually think there were so many Republican votes in the House, even though I would've liked to have seen more. There were enough that, that this might shame Schumer into bringing up the vote because it's gonna be so obvious if he doesn't that he is doing this for a reason, right? Because they have the votes. They can pass this just like they passed the gun bill a few weeks ago, right? Just like they passed, um, the infrastructure bill. So if he, if Schumer doesn't bring this up, it's a very cynical move, and-

Jason Calacanis 27:29 You think it's strategically to have that-

David Sacks 27:32 Of course.

Jason Calacanis 27:32 ... as an issue to raise funding? I, I, I, I get it.

David Sacks 27:34 Of course.

Jason Calacanis 27:35 If you, if we're gonna-

David Sacks 27:35 And, and, and, and it's really proof... Listen, I think that-

Jason Calacanis 27:37 Do you think both sides are cynical? Sacks can-

David Sacks 27:39 Of course. Both sides engage-

Jason Calacanis 27:40 Okay, so-

David Sacks 27:40 ... in politics, however, however, what I'm talking about is the type of cynicism. So, I think that there's a lotta issues on which the Democrats would rather appeal to the donor class, basically that lives on the coast in New York, California, and be able to keep fundraising on that issue and basically scaremonger on that issue instead of just winning the issue. They can just win this issue right now.

Chamath Palihapitiya 28:02 Jason Calac- Timot, do you have less interest in supporting the Democratic Party based on the principle you stated, that in the past there have been kind of promises and capital raised against, you know, codifying Roe and then it not happening? Well, they never made those promises to me, so I never felt like they lied to me. Mm-hmm. Um, I wanna be very clear. So they, nobody... And I never asked for that to be a precondition of my donation. Again, my capital was focused on one thing, which is I thought that President Trump was not the right person to lead this country. And I thought very clearly that the right Democrat could do a much, much better job. And I am glad that Biden won. And I'm glad that the money that I put in, maybe in no, in any small way, but hopefully in some reasonable, non-trivial way, helped. And I'm glad that that money helped even out the Senate. I'm glad all of those things happened. And so, I wanna be clear. They've never made those kinds of promises to me, nor have I ever asked. I make a high-level decision on who I think the best candidate should be and support the party that will get that best candidate elected. What I was just trying to make clear to you guys is that sometimes, even a Democrat, it's important for us to be intellectually honest about what has happened. It's very easy to look at the other guy and find all the ways in which they screwed up or tried to screw you or, you know, is, is, you know, lacks empathy or lacks sympathy, all of these things. It's much harder oftentimes to look at your own team and say, "Wait a minute, why didn't X, Y, and Z happen?" And the reason I'm bringing up what happened in 2009 is I think David is right. We have a moment in time where the leadership of the Democratic Party can codify rights that should be codified.

Jason Calacanis 29:47 And they should have. In hindsight, they should have done it.

Chamath Palihapitiya 29:48 No, no, no, no, no.

Jason Calacanis 29:49 I think just to be clear-

Chamath Palihapitiya 29:50 It is still open. We can do it now.

Jason Calacanis 29:52 Well, I'm talking about Roe v. Wade. And yes, and for the, for the issue we're talking about now, it should be co- uh, codified. Uh, absolutely. And just to be clear, I'm an Independent. I would vote for a Republican who was socially progressive and fiscally conservative. As long as they're for gay marriage, as long as they're pro-women's right to choose, uh, and they were fiscally conservative, I would vote for a Republican. I'm a moderate Independent. I wanna see-

Chamath Palihapitiya 30:11 By the way, I-

Jason Calacanis 30:11 ... less government and more efficient government, and I want people, I want the government outta people's personal lives. And I think that's where Sacks and I are exactly the same. We b- we both want... I mean, Sacks, do you want the government involved in people's personal lives?

David Sacks 30:22 Mm-hmm, by and large, no.

Jason Calacanis 30:22 You're a classic Republican.

Chamath Palihapitiya 30:24 By the way, according to-

David Sacks 30:24 By and large, no.

Chamath Palihapitiya 30:24 ... the Monmouth poll from a few weeks ago, you represent 4% of the voting base.

Jason Calacanis 30:31 I do, yeah.

Chamath Palihapitiya 30:31 That's an extreme-

Jason Calacanis 30:32 Yeah.

Chamath Palihapitiya 30:32 Yeah, that's an extreme minority. The, the, the, the, the lowest-

David Friedberg 30:36 ... self-identifying quadrant of fiscal conservative versus kind of fiscal liberal, social conservative, social liberal is the fiscal conservative, social liberal.

Jason Calacanis 30:46 What are we all here? We're, I think we all fit this profile. Fiscally, we want the government to be run conservatively, you know, and with less government, and we want progressive social change, right? I mean, I think we all feel that way.

David Friedberg 30:57 Don't put me in a corner.

Jason Calacanis 30:58 We want the government out of people's personal lives.

David Sacks 30:59 Well, I, I don't, I don't, I don't know about, I don't know about-

Jason Calacanis 31:00 I don't know, I'm just asking. I'm asking you guys if we're all on the same-

David Sacks 31:02 ... I wouldn't define my cultural positions as progressive social change because what, the change that progressives are trying to do-

David Friedberg 31:07 Okay, yes.

David Sacks 31:08 ... right now is radical. What I favor is social tolerance. I think we need to be a tolerant-

Jason Calacanis 31:12 Okay, explain what that is.

David Sacks 31:12 ... I think we need to be a tolerant society. America is a very broad, diverse country. We need to find ways to live together and find accommodation-

Jason Calacanis 31:20 Right.

David Sacks 31:20 ... on issues that are very contentious.

Jason Calacanis 31:22 So-

David Sacks 31:22 Uh, that includes tolerance for gay marriage. So look, I'm on board with that. But, you know, this radical, uh, progressive agenda of social change, which includes upending the, uh, the criminal justice system in favor of-

Jason Calacanis 31:34 Yeah, I know, but neither of us are in favor of that, yeah.

David Sacks 31:37 ... not prosecution, what's happening in the schools with CRT and the sort of hyper-ideologized education. Look, they should just be teaching the basics, reading-

Jason Calacanis 31:44 Yeah, leave it up to parents-

David Sacks 31:45 ... math.

Jason Calacanis 31:45 ... to do the other stuff.

David Sacks 31:46 That kind of stuff.

Jason Calacanis 31:46 I agree.

David Sacks 31:46 Yeah, exactly.

Jason Calacanis 31:47 I agree with that.

David Sacks 31:47 And so on down the line.

Jason Calacanis 31:48 But maybe progressive is the wrong term because that, that now has been co-opted. Less government involved in your personal life and tolerance, I think we all agree on that, and I think we're, we're all pretty fiscalies.

Chamath Palihapitiya 31:57 Tolerance is a great word. Everybody agrees with tolerance.

David Friedberg 31:59 It's a privileged position to wanna have less government involved in your life, right? I mean-

Chamath Palihapitiya 32:03 Sure.

David Friedberg 32:03 ... many people in the United States have been able to thrive and, and survive because of the role that government has played in their lives. And there's obviously on one end of the spectrum extreme grift and on the other end of the spectrum extreme need that is being met, uh, by the wealthiest government in the world. And it is, uh, that, that, you know, it is in that middle where all of the, the, the, the fighting happens.

Jason Calacanis 32:26 Where do you stand, Freeburg? How would you describe your politics in these two dynamics, right? You, are, are you also in this 4%? Freeburg?

David Friedberg 32:40 Yeah. Yeah, yeah. No, I'm, I'm here. Um, I, I'm trying to be thoughtful about this because I-

Jason Calacanis 32:45 Yeah. No, I think it's the idea, yeah.

David Friedberg 32:47 I think that the government's role is to support those in need, not those in want. And I think that the government should be held accountable for performing that role. Um, and I think that those of us who can, that are sitting in privileged positions and seats, should enable the government to perform that role well, and we should be positive actors, meaning we should support, we should pay taxes, and we should help people and, um, and institutions in need, and that are, you know, kind of for the greater good. And then we should be holding ourselves, our government, and our p- our politicians to account for inefficiencies. And the biggest concern I have is less about are the people in need needs being met as much as are we holding our government to account for the performance of its services and duties to the American people, and I don't think we are.

Jason Calacanis 33:37 I really like this want... I, I like this want/need concept here. Can you give an example of where the government, like, you know, people need something, but then there's another group that wants something and maybe we're overstretching and, and, you know, giving into wants when we should be focused on needs and efficiency?

David Friedberg 33:52 Yeah, I'll give you a pretty, um, e- e- example I know reasonably well, which is the Farm Bill passes every four years. And the Farm Bill, in order to get it passed in both the House and the Senate, it has components that serve both farmers and, um, support the, uh, the food stamp program. Uh, so the food stamp program obviously supports millions of Americans that are in need of food, can't afford food. They get EBT cards. They get support in buying food, and there's a lot of programs and access that are enabled by that program. But in order... uh, but that mostly services the needs of urban areas, of cities. So it passes, that, that, that element of the bill is attractive and appealing to the representatives of cities found in the House. On the other side, in order to get it passed in the Senate, where the majority of senators come from rural states which are, um, have significant farming populations, the farming subsidies are planted in that same bill. And as a result, because everyone's getting something, that bill as a whole has now grown to a multi-hundred billion dollar bill that gets passed every few years. Because in order for the Senate to pass it, the House says, "Okay, we'll give you all these farm subsidies."

Jason Calacanis 34:58 Got it.

David Friedberg 34:58 In order for the House to pass it, the Senate says... well, sorry, it's a, and vice versa, right? "We'll give you all these food stamp..." But, but both of them now have incredible, what do they call it, pork or fat or whatever?

Jason Calacanis 35:08 Yeah.

David Friedberg 35:09 The amount of money that's wasted that isn't actually servicing the original intention and need of either of the parties that are represented by that bill is extraordinary. And I've spent a lot of time in the Farm Bill. I actually went with lobbyists years ago to DC and I actually met with the Senate and House ag committees. I've gone very deep into the bill and some of the programs in that bill. And it's just shocking to me in the same way that Palmer Lucky shared in our all-in summit how shocking it is how defense spending works in this country. It's shocking to me how some of the, the programs work in the Farm Bill, uh, how much money and how much waste there is and how much grift there is.

Jason Calacanis 35:43 Mm-hmm.

David Friedberg 35:43 And so, yes, we are meeting the needs of populations in need in this country, but so much more of the bill now is about-

Jason Calacanis 35:48 Right.

David Friedberg 35:48 ... people wanting more in order to pass the bill, and it's, and it's bloated.

Jason Calacanis 35:51 All right. So who's-

David Friedberg 35:52 And, and who's gonna come in and fix it 'cause where's the incentive for anyone to come in-

Jason Calacanis 35:55 Exactly.

David Friedberg 35:55 ... and cut that bill up? Where's the incentive to fix it?

Jason Calacanis 35:57 No, if there, if both sides are barbelling the grift, then there's no incentive. They're, they're, they're in a dance to, to maximize the grift.

David Friedberg 36:03 Precisely, yeah.

Jason Calacanis 36:03 So, Chamath, um, where do you stand now if we, if we were to sort of look at politics without the Biden and Trump derangement syndrome, without the, the, the tribalism? Just in terms of first principles, I think what we're seeing here is we all want to see radical competence in the government, social issues, fi- you know, and fiscally how we run the country. Where, where do you stand? How would you describe yourself now?

Chamath Palihapitiya 36:26 Look, I mean, I think of things in terms of risk. Here's what I see. Um, I see that there are a handful of issues that remain in terms of social policy that just need to get codified.Gay marriage is an example of one, abortion rights is an example of the other. Then, and- and I think, like, those are, like, really, to m- to my perspective, speak about human individual liberty, which I think should trump everything. So everybody should be allowed to kind of pursue the best version of themselves, however that manifests, in the person you marry to, in- in the gender you express. Not- these are like things where what you do to be happy, you should be allowed to do. Period, end of story. Then there are issues where I think are much thornier and as I get older, I become increasingly ambivalent. Uh, or confused actually is a better word. And gun control is a perfect example of that, where I don't know what my right is to go and adjudicate a change to the Constitution that's been there since the founding of this country. That's a much more complicated issue. And so I think we have to basically devolve that right to the states, where individual states will have very different laws, and part of how you choose to express where you live will be defined by some of those rules. So that's the social side. Extreme tolerance is really how I would sum it up. Economically, so but- but I think the- the risk to America imploding, quote-unquote, because of an issue in that surface area, in my opinion, is extremely limited. If I look on the economic lens, however, I think there are enormous risks to American leadership and exceptionalism, and we need a wholesale reset of how we create incentives, of how government should work, of how regulatory capture should work, of how the capital markets work. These rules are way too perverted and it's creating enormous stress in a system. And again, I go back to the example I used last episode. The thing that if you look, for example, like, you know, in that example of Sri Lanka, Singapore, Jamaica, and how there were these three completely different outcomes. Underneath the most successful outcome was an incredibly clear, transparent, and simple financial framework. You cannot spend more than you have, you need to invest in long-term programs like education and healthcare, you need to make them broadly available, and then you need to have an absolute free market that gets the best ideas to the top of the funnel. And if you can just incorporate those things, the tax law could be four pages. You know? The- the- the number of regulations could be 50 pages. You know, the simple rule that says to the Federal Reserve, you can't just print free money ad hoc. So I'm- I'm much more concerned about the fiscal future of America.

Jason Calacanis 39:48 Got it.

Chamath Palihapitiya 39:48 I- I think that there's so much movement and progress on the social side, including the freedom of movement of people to different states. It- it is an important set of issues, but in terms of what drives the outcome and future success for our kids and our kids' kids, people should not sleep on the economy. 'Cause if we get this wrong, that will be the tinderbox that lights everything on fire.

Jason Calacanis 40:14 Sax, when you hear, you know, everybody sort of explain their basic, uh, belief system, how far apart do you think we all are on this podcast? Because I think that's been a- an issue we see, a lot of the fans discussing, you and I discussing. It feels like on most of these issues, and I think that's people ask me how I'm friends with you all the time and I- I'm sure you get that question as well. Yeah, and I love you like a brother and-

David Sacks 40:34 Still thinking about the answer. (laughs)

Jason Calacanis 40:35 No, I- I love Sax like a brother and- and any time we talk about basic issues, we're very much in sync, and then when we talk about politics, it feels like we're super, you know, uh, you know, opposed, you know, in- in- in opposition to each other. When you hear that we all have essentially the same stack of, uh, fundamental beliefs, h- how do you interpret this in terms of politics and- and America writ large and- and- and how do we get consensus in this country to be more effective in running the country for the citizens?

David Sacks 41:04 I think the media drives a lot of polarization, right? Because they're feeding us a bunch of bogus narratives. You look at the polling around the trust in the traditional media has absolutely plummeted through the floor. I mean, they basically have, instead of just reporting objectively the facts, they, I think the audience has recognized that they are activists. They are basically pushing an agenda, and they're pushing a bunch of bogus narratives, and I think it does drive the polarization. So that's part of it. To go back to, you know, what- what are the core issues that motivate me and, like, who I support, look, I think we could probably agree on a lot of stuff. I want us to pursue more of an internationally cautious, you know, agenda. Uh, less interventionist because it really hasn't worked out for us very well over the last 20 years with all these wars that failed. I want us to be fiscally responsible and promote a healthy economy, to- to what Jamal said. And then third, I'd like us to be socially tolerant. Now, why does that leave me in this current environment to support Republicans? Well, on international- on inter- on sort of foreign policy, neither party is really very good. Both parties are sort of pushing some version of Bu- Bush Doctrine lite where we're basically over involving ourselves in all these countries all over the world. But the Republicans at least have a faction that's in favor of realism and restraint, so I'm trying to help kind of push that direction within the party. The Democrats just are still very much in this liberal interventionist mode. On fiscal issues, both parties are guilty of overspending and creating this ruinous federal debt and deficits that we have. However, there's no way to avoid the fact that the Democrats are just worse. I mean, Biden wanted an extra four trillion of spending on this whole, uh, Build Back Better on top of the four trillion he had. So listen, I know the Republicans don't have clean hands on this issue, but the progressives are just worse, and as long as the progressives are calling the shots, the Democratic Party, they're just worse on spending. And then you got social tolerance. Listen-... on the issues, on these sort of key rights issues that have been the, kind of the old social issue the last 50 years, by and large, not on all of these things, but by and large, I'm with you guys, that I'm in favor of sort of the, the, the socially tolerant position. But look at who is pushing social intolerance today. I mean, the progressives are the most intolerant group in America. They're the ones pushing cancel culture. They're the ones trying to shove their positions down the throats of ordinary Americans. This is what's creating the backlash. And you look at issues today like CRT, like the progressive approach on crime, on borders, the progressives are trying to promote, I think, a social policy that is fundamentally intolerant and, and doesn't accord any respect or room for traditional Americans to live their lives the way they want to. And you have to be tolerant of them as well. We're not gonna have peace-

Chamath Palihapitiya 43:48 Yeah.

David Sacks 43:48 ... in our society without some tolerance of, of traditionalists.

Chamath Palihapitiya 43:51 Can I say something? Okay, one thing I, I-

Jason Calacanis 43:52 Okay, let's wrap up on this, Chamath, and then move to China.

Chamath Palihapitiya 43:54 I, I sent you guys a, um... This was a s- a quote by Mike Solana, a tweet from Mike Solana. The caption is, "I've been wondering how they were going to spin this." And this builds exactly on what David just said here. When the Quinnipac- Quinnipiac poll came out and about approve/disapprove about President Biden, you know, the big outlier was the Hispanic population. 19% approve, 70% disapprove. And the, the article in the Washington Post which tries to kind of sort of, like, clean this all up and whitewash it says, "Fake news speaks many languages, but it's particularly fond of Spanish," essentially saying that, you know, the, the fake news problem in, in the Spanish language has basically gotten so bad that, you know, this sort of explains why Hispanics have, have moved in droves. And it's, like, a whole race-baiting, cheap shot article, but the point of all of this is just to show that, uh, the Left, uh, this is what really does kinda bum me out. They are, they are probably more intolerant than they've ever been. They are, they are too cocky.

Jason Calacanis 45:03 There's an intellectual dishonesty. Like, if Rachel Maddow really wanted to increase her standing and position, she would just start the next program with Nancy Pelosi's trades and say, "Listen. We all know, let's call this what it is. It, it's not cool, and here's how it should change."

Chamath Palihapitiya 45:17 She'll never do it.

Jason Calacanis 45:18 I know. And that, and that... I think that's the disappointing part about all this. Okay. So let's shift now. I think we, we've-

David Sacks 45:22 Well, just this... Well, one... Can I say one final thing about this whole thing, then we can move on, is, um-

Jason Calacanis 45:26 Sure.

David Sacks 45:26 I, I think, uh, I think if you are sort of purple and centrist, I think the first two years of the Biden administration were really a missed opportunity, because I think there's sort of this conventional wisdom that the party's so polarized they can't get anything done. I think e- we saw actually there's enough Republican votes, or there were in the, in the previous Congress, this, this current Congress, they got the infrastructure bill done. They got, um, the gun bill done, you know, with the red flag laws and so forth that we talked about. They can get codification of gay marriage done if they want to. They could've gotten, uh, the Electoral Count Act reformed. So if Biden hadn't gone all the way with his progressive voting rights agenda and just focused on reforming the Electoral Count Act, then you could've prevented a situation like we had on January 6th that, that... What, what was happening inside the Capitol, not outside. So there was a lotta stuff they could've passed, and they didn't. Why? Because the... In the f- in the first half of his administration, Biden's been completely captive to the progressives. There's another thing as well. You could get a child tax credit, uh, passed. You could get... Romney would basically be the floor leader on that in the Senate. They could pass a child tax credit. That's the most popular part of BBB. Why don't they peel that off and vote on it? 'Cause it's like-

Jason Calacanis 46:38 Yeah, because they went for the whole thing. They went for the whole thing.

David Sacks 46:39 That's right. The progressives are holding it hostage, saying that, "We're not gonna give that to you unless you do the whole enchilada." And of course, there's no votes for that. So I think there's a... And, and, and, and so who ultimately is the culprit for allowing this to happen? Well, partly Biden, but also Ron Klain, the Chief of Staff. I mean, they've made a, a, uh... Instead of triangulating to the center, they should've realized, "Hey, we're a 50/50 President, right?" I mean, we have a 50/50 Senate. We should be triangulating. We should be building a centrist coalition. Ron Klain's going-

Jason Calacanis 47:06 I, I agree.

David Sacks 47:06 ... e- has been letting-

Jason Calacanis 47:07 Going, going moderate would have been-

David Sacks 47:07 The progressives tried the train.

Jason Calacanis 47:09 Biden had a clear path to go right to the center, pull everybody in, pull the working class in. That's been his supporting base-

Chamath Palihapitiya 47:15 It's who he is.

Jason Calacanis 47:15 ... is the working class. And, and it's who he is. And, and he blew it by going too far to the left. If he wants to save this presidency, he should go straight to the middle and get all the working class behind him and be reasonable.

Chamath Palihapitiya 47:25 Biden isn't the guy that went to some elite, you know, uh, East Coast liberal arts school where he got a master's in, you know, fine arts and is 400,000 in debt. That's not Joe Biden. But he's let all these people run over the White House.

David Sacks 47:43 And it's too late now because they're, the... I think what's gonna happen is that-

Chamath Palihapitiya 47:46 Is it too late? Yeah.

David Sacks 47:46 Well, the Republicans are gonna win the House at least.

Chamath Palihapitiya 47:49 How much time, how much time did we spend talking about canceling student debt for who?

Jason Calacanis 47:53 Yeah. No, for a bunch of elite, uh, people-

Chamath Palihapitiya 47:56 Elite rich kids. (laughs)

Jason Calacanis 47:56 ... with graduate degrees from... Yeah. It's like, we... I mean, listen, there's grifters on both sides. It's disgusting, and we need to get to a, a version of politics that maybe is more like our conversations here. But let's,

Jason Calacanis 48:07 let's pivot to another society that we thought was gonna roll over ours but, um, and that we were in, uh, we were behind on in terms of competition. China's in chaos right now apparently, um, in terms of slowing economic growth, bank protests, mortgage protests, exactly what I predicted last year when you guys were talking about China was gonna dunk on us. And I said, "You know, it's very hard to run these authoritarian countries, and, uh, the citizens like to protest when they get the short end of the, uh, the stick." And here we go. Chinese economy is, is growing very slowly. They were gonna do 5.5% this year. They were only 0.4% in Q2. COVID has a lot to do with this. But there's been a series of bank protests, and, uh, the media has been trying to figure out exactly what's going on here. To just set the stage here, rural banks in China, uh, in a couple of provinces froze a bunch of people's, uh, withdrawals in April. Okay? Sounds like the crypto, uh, contagion, uh, in many ways.... they had been offering unusually high interest rates, also sounding (laughs) like the DeFi, uh, grift going on here.

David Sacks 49:08 No, no, I think it's, I think it's more like 2008, Jason. I think the financial-

Jason Calacanis 49:10 Yeah.

David Sacks 49:10 I think it's more like the financial crisis in 2008 that was driven by the real estate bubble.

Jason Calacanis 49:14 Yes, which we'll get to.

David Sacks 49:15 They've got their own real estate bubble, which is collapsing there.

Jason Calacanis 49:17 Correct. And so, there's, there's multiple things going on at once. The authorities haven't said how much money is frozen. Uh, protestors claim it's billions of, uh, yuan, but it's hundreds of millions in the US. After weeks without a resolution, customers have been, began protesting. Plainclothes thugs have been hitting and kicking the protestors. And as of Wednesday, a video went viral of the CCP bringing in tanks to protect the banks. Very, uh, evocative of Tiananmen Square.

David Friedberg 49:46 Jakab, I have a question.

Jason Calacanis 49:47 So... Go ahead. Yeah.

David Friedberg 49:48 So China has a very explicit zero-tolerance policy on COVID.

Jason Calacanis 49:53 Mm-hmm. Correct.

David Friedberg 49:53 Why do you guys think they are so extreme in that policy? Like, w- uh, any, any ideas? Like, uh, have they explained why it has to be zero tolerance?

Jason Calacanis 50:05 They have not explained that, um, and if you believe that they are the origin of COVID, maybe they have some insider information about long-haul COVID, and that was something I wanted to talk to Friedba- Berg about, if he thinks this, you know, long-term COVID stuff is a really acute issue. But Friedberg, what do you think?

David Friedberg 50:22 Yeah, I don't... Uh, let me... I don't wanna answer that question yet.

David Sacks 50:26 Can I, can I answer, can I answer that if you don't want to?

David Friedberg 50:28 G- g- go ahead, Sax. Yeah, go ahead.

David Sacks 50:28 Listen, uh, I, I think the answer is very simple, which is-

David Friedberg 50:31 But I do wanna talk about the Chinese economy. I, I, I, I-

David Sacks 50:33 Oh, yeah, yeah. No, there's, there's a lot going on.

Jason Calacanis 50:33 Yeah, we got, we got two more cards to turn over too. Yeah, this is a complex issue.

David Sacks 50:37 There's a lot more going on there. So on, on zero COVID, I think this is coming directly from Xi. This is his policy. And I think that earlier in the pandemic, they were hailing their response, which they saw as orderly and effective at controlling COVID, and they were contrasting that with the chaotic Western response. And so, I think that the, uh, credibility of the CCP and Xi himself got tied up in this idea of stopping COVID entirely, of zero COVID. And so, I think this is coming directly from the top and it's having a huge impact on their economy. And I think this is one of the dangerous aspects of a autocratic system, is you got one guy at the top making the decisions, and if he's wrong, there's not really a great feedback loop for correcting him.

Jason Calacanis 51:22 And nobody can question him. Yeah.

David Sacks 51:24 Yeah, exactly. So-

Jason Calacanis 51:24 There's no questioning the God-King, yeah.

David Sacks 51:26 You know, it sort of recalls, um, a situation in China, I think this was about 500 years ago, there was a Chinese emperor who banned shipbuilding and banning having a navy. And because of that, China shut itself off from global trade, and it fell well behind the West, which then explored and captured the New World. There's this question about, you know, the Chinese, uh, Chinese culture and civilization was much more advanced than the West, than Europe, a thousand years ago but basically, it fell behind. And a big reason is because of this unilateral decision by one emperor to basically close themselves off from the rest of the world. So, you have to wonder, does this, um, autocratic move by Xi basically doom their economy to a recession? It seems like they're not learning from our experience. These lockdowns didn't work. I mean, you can't stop the virus. It's eventually gonna get out. Even, I saw Biden got the virus this week. I mean, it's out, right? It's endemic now.

Jason Calacanis 52:19 It's out. Of course. Yeah, everybody's gonna get it, is, uh, basically what's happening.

David Sacks 52:21 And, um, Xi has been making a bunch of heavy-handed decisions like this. So you got... Besides lockdowns, it was, it's also the crackdowns. It's the crackdown on the tech industry-

Jason Calacanis 52:29 Yeah. The venture funding-

David Sacks 52:31 ... and tech entrepreneurs.

Jason Calacanis 52:31 ... has plummeted, uh, and so has... So LPs are no longer investing in funds there, with the exception of Sequoias, which seems to be struggling but is still able to raise some money. And then additionally, uh, founders can't raise money, and founders are questioning when they meet with VCs if they can actually... if the VCs are just meeting with them theatrically, uh, the story that came out this week in the FT. If they're just meeting with them theatrically because they want to still hold out hope that there'll be a venture capital industry, but there may not be a VC industry in China anymore. Let me just give you the housing stuff, and then Friedberg, I know you wanna chime in on this. So there's also mortgage bo- boycotts happening at the same time as this fugazi bank stuff happened. The bank stuff seems to be not the national banks. These are local banks that apparently could have been running some kind of, uh, grift where people deposited the money and they ran away with it.

David Friedberg 53:20 Well, it looks, it looks a lot like the savings and loan-

Jason Calacanis 53:22 Yeah.

David Friedberg 53:22 ... kind of, uh, behavior in the '90s in, in the US. I mean, you know-

Jason Calacanis 53:25 Yeah. And these are regional banks, to be clear. This isn't the national banks. And so, at the same time, the mortgage boycotts are happening in three, at 301 unfinished developments in 91 cities. Homeowners are accusing developers of failing to deliver the apartments they've already paid for. According to Bloomberg, 70% of household wealth in China is tied up in property, much higher than the US.

David Sacks 53:42 This is downstream of the whole Evergrande thing, right?

Jason Calacanis 53:44 Main downstream, yeah.

David Sacks 53:44 You got Evergrande. Evergrande basically defaulted, and there were a whole bunch of people who prepaid for their homes.

Jason Calacanis 53:50 Yes.

David Sacks 53:50 And so, they're already paying mortgage, but Evergrande never finished the homes. And now, they're rising up because they're saying, "Why should we pay for a home that was never delivered?"

Jason Calacanis 53:57 Right, right.

David Friedberg 53:57 I just wanna, like, take a zoom out because I think it's worth... You know, we can focus on any one of these particular things that are happening and try and diagnose them and dissect them. But if you zoom out a little bit, I think it paints a more interesting picture. Over the last 30 years, right, the Chinese economy grew from 318 billion to, in 1990, to 10 and a half trillion in, uh, 2020, right? Incredible growth. GDP per capita, you know, grew, uh, kind of in a, in a similar, uh, ratio, right? Now, uh, from 318 bucks per person to $12,500 in 30 years. I mean, really unprecedented in the history of humanity. China now accounts for 20% of global GDP from less than 2% in 1990. Now, if you look at historically what drove that growth, we all talk about manufacturing, right? Manufacturing counts for about a third of the economy. And manufacturing as a sector was growing in China 25% year over year in 2008.And then, um, only grew six percent in 2022, so like, basically, you know, kind of reaching a- an all-time low in- in recent years. So that's historically been the driver for growth of this economy. And so much of the, um, you know, the- the- the bargain between the people and the Chinese Communist Party has been, keep giving us a better life, keep growing our economy, keep giving us more housing, more stuff, more food, more safety, more security, we'll support the CCP. And the challenge that the CCP is having is that a lot of that growth, the core growth engine is starting to slow. So manufacturing is slowing, then real estate was growing, and so real estate accounts for 7% of the Chinese economy, and I've got a good stat for you guys here. In 2005, uh, 250 million square meters of real estate was sold in China. In 2021, 1.5 billion was sold. Every year it's been incrementing. So the amount of real estate that's being produced and sold was increasing like crazy. This year it's collapsed, so it's all- it's down like, you know, forecast to be about 1.25 billion now. So the first decline in real estate building and sales. So that part of the driver of the gl- of the economy in China is now collapsing. And then the financial services sector accounts for 8% of the economy, and that's been growing because it's leveraged off manufacturing and real estate and all the capital that's flown in, all of which is slowing down and stopping. You know, there's $58 trillion of assets in China generating about $700 billion of annual profits for the financial services industry, insurance, banking, lending and so on. So a lot of the conflict and the things that are starting to fall apart, which may just be the tip of the iceberg, is a function of a fundamentally slowing economy and the forecast and the outlook for an economy that doesn't have the drivers it's had historically, and things are starting to come off. The wheels are starting to come off a bit. And so, you know, look, the advantage they have is central planning, long-term investments, being able to kind of be thoughtful about this. But in order to do that, there's certainly gonna be a need for the CCP to keep people in line as some of the long-term bets hopefully play out for them, as they would say. In order to do that, they're gonna have lockdowns and other sorts of mechanisms of regulatory control over the people, but really, this could be the beginning of some of the unwinding and real concern about, um, you know, is there a core economic growth engine in China that can save them, and what will it be?

Jason Calacanis 57:10 I think all of this, if we look at what's happening in the economy writ large, uh, Chamath, you know, the global slowdown plus inflation is now causing a stress test on every country. Sri Lanka's stress test, you know, uh, showed us what's happening with their farming issues and with corruption. And here in China, it- the stress test, uh, I think you would agree, is showing what's going on in terms of, you know, banking, mortgages, real estate, and obviously this surging middle class and what their expectations of life are. So what- what's your take on what's happening in China and are they... You know, uh, how does this, um, add up in terms of our rivalry with them as our contemporary?

Chamath Palihapitiya 57:52 Th- at a very macro level, China has one massive, massive, massive problem, which is one of population. It's hard to get an accurate count, but it is an aggressively aging population, which was the result of the one child, the one-child policy for a very long time. China has sort of been on their heels trying to adapt that policy, but really, the- the last data I saw, I tweeted this out, it was a little while ago, Nick, so may be hard for you to find in my Twitter feed, but it was a projection of China's population which essentially showed it contracting by almost 50% by 2100. So in the n- in the, so it- that's a really, really bad situation. Now, when you have a slowing population, then the economy has to morph. Why is that? When you have a young population, so for example, take what China was 20 years ago when it entered the WTO or what, uh, India is today, when you have lots and lots of young people, you can on-ramp them into economically productive activities like manufacturing. The problem when those folks accumulate middle class income and wealth is that they age out of those kinds of jobs, like they did in America, and what we seek are services and service-level jobs, and you spend more money, you spend it in a different way. So as populations age, your economy has to turn over unless you have a large bulwark of young people that is constantly growing to take up more of the slack, the economic slack, to pay for these folks who have different lifestyles, more savings, and different needs, specifically healthcare. That's China's enormously big problem. So when you see them talking about 6% GDP targets and you think, "How does a country that big even grow at 6%?" It's because they're reverse engineering for what they need to create economic vibrancy in that country. And so when you start to look at two percent, which in America you'd say, "Two percent's great." (laughs) We would like high-fiving each other for two percent. Uh, that's not a sustainable level of growth for what's happening inside that country. It does not create enough of expansion economically to cover all these folks. That is a really, really big issue. So as that happens, I think what we need to do is figure out how to be competitive. Now this goes all the way back to our first conversation. Subsidies don't make us more competitive. Things that governments can do to make us more competitive are long-term, drawn-out tax incentives that change the earnings capacity of companies. Why? Because then the capital markets reward those businesses. Jason, you just mentioned it. Why is the Chinese capital markets in difficulty? Nobody knows what the long-term earnings are. How do you forecast it? It's not simple anymore. It's not a model, it's not an interest rate, it's not a discounted set of cash flows. Right?And so that's how they need to refactor themselves. They need to have a much larger population. If you don't have that, you have to figure out how to do it with immigration. If you don't have that, what China has done is, they've tried to go to Southeast Asia into Africa, and they've tried to create that synthetic form of a growing pyramid, right? Now, that can work as long as the balance sheet of the country supports that, because ultimately you're still talking about moving money offshore, okay? So I think they're in a little bit of a, uh, they're, they're in a pretty difficult spot.

Jason Calacanis 1:01:29 The most difficult spot is the one they put, that Xi put them in. If you get rid of entrepreneurship, if you get rid of high growth companies that create the opportunity on a global scale, and then you, you know, take DiDi off the public markets, you don't let education companies become public, or y- you basically get rid of their little co-opting of capitalism and venture capital, their whole, their whole society is gonna become slow growth. And slow growth in a country that doesn't have safety nets is really dangerous. Sax, your thoughts in terms of competition versus America?

David Sacks 1:02:01 Y- okay, let me get to the, the competition in a second. Just to build on what Chamath said, the, uh, the birth rate, the, or the fertility rate in China slipped to just 1.15 in 2021, so last year. It takes 2.1 just to maintain your population at replacement level. So, and this is lower than even Japan, which is also shrinking as a... Japan's at about 1.3. The US and Australia are at 1.6, but we get above 2.1 because of immigration, and China doesn't have that. So they've got a huge demographic problem. To Chamath's point, it's gonna be something like, well, the population is shrinking by 40% with every generation. That's what these numbers imply.

Chamath Palihapitiya 1:02:38 Insane.

David Sacks 1:02:38 The numbers are, it's gonna be under 600 million by the year 2100, but I would, I don't understand how it wouldn't even be less than that if it keeps going at this rate. So there, and the, the commentator, Peter Zihan has, or I don't know if that's the right way to pronounce his name, Peter Zihan or something. Anyway, he's pointed out that China is facing demographic collapse in the next decade or so. On top of that, like you're saying, Jason, the, you've got, um, Xi emphasizing Maoist economics. He basically says he, he thinks that the Chinese economy, again, he stresses the need for socialist characteristics, and he seems to be bringing back that sort of communist ideology to their economy, and they've basically really cracked down on entrepreneurship and venture capital. It's really a cell phone. I mean, they've moved away from the policies that have made them so successful economically over the last 40 years. And then on top of that, you've got this debt crisis and this housing crisis. So it really looks like the deck is stacked against all of them, and you're asking, "What does this mean for us?" Well, I think it depends on whether you look at it economically or geopolitically. I think if you look at it economically, you'd say that it's bad for us, because our two economies are economically linked. There's a lot of dependency. They've evolved together for a long period of time. And they're, if China has a collapse, then that could... They're so big now, that that's gonna have, I think, global repercussions. There's gonna be contagion. But the truth is, if you look at it geopolitically, and geopolitics is more of a zero, the balance of power is a zero-sum game. Economics can be a positive-sum game, but, but the balance of power is a, it's definitely not a positive-sum game. Uh, you'd have to say it's good for us, because the reason why China has become such a threat is because of its growing economy over the last 40 years.

Jason Calacanis 1:04:23 Yep.

David Sacks 1:04:23 And look, I mean, what they've done and what they've been doing over the last decade or so is translating their economic might into military might, and that has given them the capability to now threaten their neighbors, to become more belligerent, to basically rattle the saber against Taiwan, and if their growth, if their impressive economic growth continues for the next couple of decades as it has until now, there's no question that they will, they will basically try to assert their hegemony over East Asia, and, uh, Taiwan will be a huge flashpoint, but there's also flashpoints in the East China Sea with Japan over the Senkakus Islands.

Jason Calacanis 1:05:02 But they're gonna need a bankroll to do that. So if they don't, if their economy-

David Sacks 1:05:05 That's right.

Jason Calacanis 1:05:05 ... is not growing, they don't have the bankroll to do it, they're gonna have to look inward and say, "Hey, we gotta fix these domestic problems. We gotta get people to stop protesting in the streets. We need to..." This middle class is demanding of jobs. The great news for what's happened in China, a- and I think this is why the people there are very happy, is the number of people living in poverty has plummeted, you know? When they started tracking this data in the '80s, you know, high 90% of people were living in extreme poverty or poverty. 99% of people were in poverty on the, on the, uh, global definition of it, and now, you know, it's just plummeted to, you know, a couple of hundred million people, so. Um, a couple of charts for you here, but just, a- and the data is obviously, it's very hard to understand what's going on in China because a lot of it is opaque, but just the number of people on a percentage basis living in poverty has gone, and now the number of people who are in the middle class has surged. That creates another dynamic. Those people want to have a great life, they want better jobs, they don't wanna work in factories, they wanna have a, a more information-based economy and, and, and a better job than 60 hours a week in a, in a factory. That's why they're moving their factories to Africa and other places.

David Friedberg 1:06:07 I mean, I, I, I don't know if that's absolutely true. I, I think that China's manufacturing sector is, um-

David Sacks 1:06:13 Okay.

David Friedberg 1:06:13 ... is aiming to evolve. So, you know, China has about three million factories or manufacturing facilities throughout the country, uh, employing about 112 million people. The US has about 300,000 factories employ- employing about 12 and a half million people. The output of our factories is, um, uh, about 70% of the output of, um, of China's factories, uh, in a- in aggregate. Sorry, the total, uh, production output of all the factories. So we have very, um, high value outputs coming out of our factories, and high leverage. China is observing and obviously recognizes that there's an opportunity probably.... to evolve their manufacturing capacity to be higher leverage, higher value output. And so there is gonna be, you know, from the long-range perspective, planning an investment in technology that allows those factories to become much more sophisticated and create much more higher value products moving up from what is effectively just cheap labor, putting things together in an assembly plant, to being things like additive manufacturing, 3D printing, um, automated manufacturing, bio manufacturing, et cetera. Um, and I think this is particularly, um, gonna be realized because China announced that they're building 400 nuclear power plants. That drops the cost of electricity to under five cents a kilowatt hour. In the US, manufacturing, um, e- electricity typically cost around 11 cents per kilowatt hour, 12 cents per kilowatt hour, in that range. So if factories become much more automated, they start to become a function of the price of electricity in terms of what they can output. China's gonna have a huge advantage as these nuclear power plants come online over the next couple of decades and these facilities get upgraded. So there is a plan, right? Remember, this isn't just like-

Jason Calacanis 1:08:01 They do have a plan and, and th- the reason they have that plan-

David Friedberg 1:08:04 Yeah. A- a- a- and there, there, there is, there is a question of do they get there fast enough to drive economic-

Jason Calacanis 1:08:09 Correct.

David Friedberg 1:08:10 ... growth that actually supports all these other industries like real estate and finance that they've become critically dependent on because those industries only work if there's a core economic driver or core economic engine that's working here. So this energy infrastructure, this new manufacturing infrastructure, these are things that, by the way, they can do, um, really effectively because they're not working on four-year and six-year political cycles. They can take a five, 10, and 30-year outlook and make a, make a plan and, and, and invest against it. It's what they did from 19...

Jason Calacanis 1:08:38 Yeah.

David Friedberg 1:08:38 So I wouldn't count 'em out, but there's certainly a lot of challenges they're facing right now and it's a big question mark right now what's gonna happen.

Jason Calacanis 1:08:44 Well, and it... to your point, factories in China are, you know, factory workers getting paid over six bucks an hour now, in Vietnam, three, in India, even less. And that's why you're seeing a lot of folks, uh, I don't know if you're seeing it in your portfolios, but we've seen a lot of folks looking at India, Vietnam, and moving factories there. And obviously Japan has been, uh, incentivizing people to move out of-

David Friedberg 1:09:05 China's not gonna just lose their manufacturing edge. They're not just gonna say, "Hey, we give up. Let, let everyone go to Vietnam." They're gonna try and upgrade the capability of those factories-

Jason Calacanis 1:09:12 Yes.

David Friedberg 1:09:12 ... and say, "Hey, instead of just putting together, you know, parts for, with $6 an hour human labor, let's start to do the more sophisticated stuff that you see elsewhere."

Jason Calacanis 1:09:19 So then Freeberg,

Jason Calacanis 1:09:21 the next card that turns is, well, what happens to those factory workers if they've been automated out? What do you do with hundreds of millions of people working in factories who-

David Friedberg 1:09:27 Yeah.

Jason Calacanis 1:09:27 ... now have been turned into robots? And then if they're gonna be in an inf- and the answer is information economy, if it's gonna be an information economy, you need venture capital and you need new companies to s- create those jobs and they just killed that. So I-

David Friedberg 1:09:39 Yeah.

Jason Calacanis 1:09:39 ... I don't know what strategy Xi is, uh, pursuing here, but it seems like a bad one.

David Friedberg 1:09:43 We could talk about this one at length, but, um, we were gonna bring this up, but, you know, generally speaking, technology drives productivity gains, but it's p- it's deflationary in the short term.

Jason Calacanis 1:09:53 Explain what that means on a, in like a practical sense. Maybe, uh, you know, that the technology, uh, is deflationary.

David Friedberg 1:09:59 So let's say, let's say that you have to pay-

Jason Calacanis 1:10:01 Example maybe.

David Friedberg 1:10:01 ... a bunch of people to make a T-shirt and then a machine is built that makes the T-shirt. The cost of the T-shirt goes down because one machine can just print out 100 T-shirts an hour, whereas it would take five people, you know, 10 hours to make those-

Jason Calacanis 1:10:13 Yeah.

David Friedberg 1:10:13 ... 100 T-shirts or whatever it is. Right? So a technology of, um, uh, kind of emerges and those people are now theoretically out of jobs. But what ends up happening is those people transition into new jobs that didn't exist before and we end up seeing higher order work take place. Think about the, the world 200 years ago. Do you think we would have had any concept of people being Uber drivers or people, um, uh, you know, creating crafts and selling them on Etsy? Um, or-

Jason Calacanis 1:10:41 YouTubers, content creators. Podcasters.

David Friedberg 1:10:42 Or p- people being y- yoga teachers or yoga t- or yeah, yoga teachers or psychotherapists.

Jason Calacanis 1:10:48 OnlyFans. OnlyFans. Oh, okay. Well, there you go, Josh. OnlyFans.

David Friedberg 1:10:50 Or do- or OnlyFans or dog walkers or all of these, um, these service businesses or, you know, industries that simply did not exist before. And so the labor that those... that that l- percentage of the population was involved in historically has gone away because it's been automated. As that automation has happened, it's allowed higher order services jobs to emerge and that will be the progression of humanity forever. I will tell you guys, um, I- I was gonna mention this. Have you guys played with DALLE 2?

Jason Calacanis 1:11:18 Yeah.

David Friedberg 1:11:18 The other day? Um-

Jason Calacanis 1:11:19 Yeah, sure.

David Friedberg 1:11:20 I got the, the login. I was, uh, my brother-in-law was visiting. We were playing with DALLE 2 and making funny kind of photos and-

Jason Calacanis 1:11:25 Explain what it is. Yeah.

David Friedberg 1:11:26 So, so DALLE 2 is developed by OpenAI. Um, we all know Sam Altman, he's been leading that organization to great effect over the last couple of years. And, um, and what they're doing is they- they've