All-In PodcastE94: NFT volume plummets, California's overreach, FBI meddling, climate change & national security
EVERY SPOKEN WORD
150 min read · 30,203 words- 0:00 – 4:16
Bestie intros + Burning Man debate
- JCJason Calacanis
All right, everybody. Welcome to Episode 94 of All-In. This is a summer unprepared episode. There's not much news. We're gonna wing it. With me again in his, uh, golfing cap, the Rain Man himself, David Sacks. You doing okay, buddy?
- DSDavid Sacks
Yeah, everything's good.
- JCJason Calacanis
Yeah? All right, all right.
- DSDavid Sacks
I'm kind of annoyed that we're taping on a Wednesday.
- JCJason Calacanis
You know, this is a slow news week. It's a slow news week.
- CPChamath Palihapitiya
Well, that's not why we're taping on a Wednesday, is because you have to want to go to Burning Man.
- JCJason Calacanis
Well, whatever. I mean, listen, everybody has to get their burn on.
- CPChamath Palihapitiya
Sacks, have you ever been to Burning Man?
- DSDavid Sacks
Yeah, I've been before.
- CPChamath Palihapitiya
Did you like it?
- JCJason Calacanis
Sacks was at Burning Man? Really?
- CPChamath Palihapitiya
He was there on Threesome Thursday.
- DSDavid Sacks
(laughs) I've been a couple of times. I think it's, uh, it's a cool experience doing, worth doing, you know, once or twice in your life. It's not something I want to do every year, but, um... And I know a lot of people do like doing it every year. They're like really into it. I'm not really into it that way, but I think it was a worthwhile experience to go at least once.
- CPChamath Palihapitiya
Chamath, have you been? Uh, no.
- JCJason Calacanis
Freyberg, have you been?
- CPChamath Palihapitiya
I've not been, no. I have no desire, no. I don't like driving in the car for a long period of time, and... Well, the... Uh, by the way, I'll tell you, I'll tell you why I don't really have a huge desire to go. I, uh, I don't really have a huge desire at this point in my life to want to do a ton of drugs.
- JCJason Calacanis
That's not, that's not just about that.
- CPChamath Palihapitiya
Really?
- DSDavid Sacks
(laughs)
- JCJason Calacanis
No, really, seriously, it's not.
- CPChamath Palihapitiya
Are we joking right now?
- JCJason Calacanis
What it's really about is art-
- CPChamath Palihapitiya
Are we joking right now?
- DSDavid Sacks
(laughs)
- JCJason Calacanis
It's, if you like art and you like music, it's amazing. It's amazing.
- CPChamath Palihapitiya
I really, I really like art. I think I actually collect phenomenal art. In fact, I like to go to like Frieze, the Biennale.
- JCJason Calacanis
It would blow your mind.
- CPChamath Palihapitiya
That's where you go see our museums.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
No, no, no. You have no idea. The scale of the art there is tremendous. It is extraordinary. And if you're into music-
- 4:16 – 10:20
NFT trading volume plummets
- JCJason Calacanis
in. I don't know if you've been following the NFT story. We'll queue that up as our next story. Uh, OpenSea, the marketplace, the eBay of NFTs, if you will, the volume has dropped 99% since May 1st peak of $406 million in a single day. On August 28th, volume dropped to around $5 million, down 99%, according to decentralized app tracker DappRadar. Now, on a monthly basis, OpenSea's volume has dropped 90%, according to Dune Analytics. The floor price of a Bored Ape has now dropped by 53%. Uh, if you remember, OpenSea raised 300 million at a $13.3 billion valuation December 2021, uh, in a round led by Coatue and Paradigm. To put that in perspective, that was nine whole (laughs) months ago. My, how the world has changed. Freyberg, what's your take on NFTs and this whole boondoggle?
- CPChamath Palihapitiya
I, I don't know how to...
- JCJason Calacanis
How will we look back on it?
- CPChamath Palihapitiya
Yeah, I don't, I don't know. I mean, we've had a lot of bubbles as a species. This is just another one.
- DSDavid Sacks
I thought we were gonna stop doing stock market crashing stories. (laughs)
- JCJason Calacanis
Well, this is a different, this is a different market. What do you think? Did you invest in any of these NFTs?
- DSDavid Sacks
We're in the eighth month of this story, which is fill in the blank asset class crashed.
- JCJason Calacanis
Yeah. This one seem... I, the, the question I have here, Sacks, is do you think that this is the end of the category, though? Do you think there's a category ending? And do you think there was ever anything interesting here? 'Cause you took a... You, you heard a lot of pitches like I did for how NFTs were gonna change everything, non-fungible tokens.
- CPChamath Palihapitiya
Yeah. You know what? I'll, I'll, I'll, I'll say something 'cause I, I liken this to the point, um... Just to tie it back to what we just talked about. At the end of the day...
- DFDavid Friedberg
You know, I think I've said this in the past, but like what differentiates humans from all other species on Earth is our ability to tell, to communicate and tell stories. A story is like a narrative about something that doesn't exist and by telling that narrative you can create collective belief in something and then that collective belief drives behavioral change and action in the world, right? I mean everything from religion to government to money to art is all kind of driven, all markets are driven by this notion of narrative and collective belief that arises from that narrative. So when you go to an art dealer and you have a sit down with an art dealer, you might appreciate the art, but then the narrative begins. And the narrative is this artist did this, and they came from this, and the artist that looks like this traded at 6.8 million and this artist is only trading for 3.2 million and the whole narrative takes you away into, okay, I should pay 3.2 million for this piece of art, and ultimately it'll be worth more. And that's the fundamental premise of markets, is you're buying into something not necessarily always, and this is such a minority now it's scary, used to be that you'd own a piece of a business or productive asset, you'd pull cash out of it, hopefully you get more cash out than you put in when you buy it. Nowadays, markets allow you to trade, therefore the majority of market-based decisions are driven by if I buy something for X, I'm gonna be able to sell it to someone else for Y. And so the narrative is driven around I'm paying this, someone else'll pay Y down the road, I'll make money from that. And this has been repeated a thousand times over. It's been repeated in the ICO tokens, it's been repeated in the tulip bubble, it's been repeated in every art market and subsidiary of every art market since the dawn of time, uh, since the dawn of, of, of markets, and I think the NFTs are really just one more kind of example where this beautiful narrative is formed, the, the digitization of art, but it is no different than any other form of assets that we tell ourselves a story around and we convince ourselves that I'm paying something today and someone else will pay something more for me tomorrow. And I will also say that in the last year with the liquidity that we saw the last two years, it leached into the stock market where there's supposed to be more rational behavior that ultimately the cash flows of an asset you're buying should generate more for you than the money you're spending to buy that, that, that asset. And ultimately you can maybe trade out of it early, but still so much of it became about, well, the stock is going up, therefore if I spend X someone else'll spend Y and I'll make money on the stock, with no underlying assertion of what's the productivity of that business, what's the return on cash gonna be based on the cash flows coming out of that business over time, or any of the fundamentals around it. And so so much of our discussion and distortion has really been driven by this narrative fueling. And I think the NFTs are an example, but there are many others, and we're gonna see many more as long as humans have the ability to communicate with each other.
- JCJason Calacanis
Do any, do you have anything on it, Chamath?
- CPChamath Palihapitiya
I think Friedberg's mostly right. Like I do think that there is this thing, the, the Burning Man Coachella example is the best way to describe this. A lot of these things are the same, but when a few people approach something early, they're too insecure to admit that it's the same as something else, and so they spend a lot of time trying to tell you a narrative about why it's totally different. The Buffett example, you know, would be the quote, you know, when e- somebody tells you that this time is different, it's probably not that different. Uh, or the other quote that's well-worn in history is like, you know, things don't necessarily repeat in history, but they rhyme. All of this is trying to say that other than like fundamental leaps of science, there's not a lot of stuff that's new in the world. You know, we are repeating things over and over, and one of the things we repeat is the social capital that you get from having certain choices and then getting other people to validate those choices because you want to feel like you're, you know, worthwhile. And this happened in NFTs, and I'm sure in the first phase of different movements in art that also happened. It's probably happened in a bunch of other markets as well. So these things are more similar than they are different. Coachella and Burning Man, the same. NFTs and part of the art market, the same. Everybody that runs to you with why it's so different, I would just have a grain of salt and say you don't need to be different, just enjoy it because you think it's cool.
- JCJason Calacanis
All
- 10:20 – 40:15
California's new fast food wages bill, government creating bad incentives, how the free market response will further the labor issue
- JCJason Calacanis
right. We can go either to this California fast food wages story or we can go to Goldman Sachs workers are quitting en masse because Goldman Sachs is saying you got to come back to the office five days a week. Where do you want to go, boss?
- CPChamath Palihapitiya
I think the California thing is really interesting, just the, the three things that California did in the last week, I don't know if you guys saw, but number one is they basically, uh, said that, you know, you have, they're going to ban ICE combustion engines I think by 2035. So you have to be battery EV, um, and they have this ha-
- JCJason Calacanis
New, new sales. You can still have old sales.
- CPChamath Palihapitiya
New sales, sorry. Yeah, new sales.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Um, which is the first in the country to do it. And just to go back to a second, California is the largest auto market in the United States, and effectively, you know, Trump and California got into a huge spat because California had certain emission standards that were tougher than the rest of the United States, and, you know, the federal government tried to sue California and back and forth, all of this rigamarole. So California's always sort of led on climate. That was one thing. Then the second thing is they said we're going to create, you know, a state sponsored organization to set the minimum wage rates for fast food workers. Pause what we think about that. And then the third thing is that, um, this congresswoman I think or this assembly person, Buffy Wicks, passed a law, um, through the Senate and through the, the House that essentially holds social media companies liable for the mental well-being and the mental health of kids. Um, and depending on where you're lying on all these issues, it's like an interesting kind of lens in which we're like California is really becoming extremely, extremely, um, legislatively active in basically imfi- imposing their will on free markets and the economy.
- JCJason Calacanis
... there.
Yeah, and f- for people who don't know, the fa- the fast food issue was they wanna move to a more European style where instead of unions debating with individual corporations, McDonald's, Burger King, whoever, what they're gonna pay their employees, uh, or employees, uh, having that discussion one on one, they want the state, some state authority, to pick the amount per hour fast food companies pay and then, I guess, disintermediate the unions? Uh, it, it's kind of confusing, but interestingly, uh, uh, our friend, uh, Lorena González, if you remember, she's the one who told Elon to, you know, F off, um, and was a, a former, uh, Democratic legislator. Um, uh, she introduced the bill when she was in the assembly. And so it's kind of a weird approach. Uh, I'm not sure why the government wants to get involved in it.
- DSDavid Sacks
No, it's not, it's not, it's not disinter mediating the unions. She, Lorena González Fletcher, I guess, now, she's the former Democratic legislature who drove Elon out of the state. Remember when she said-
- JCJason Calacanis
Sure.
- DSDavid Sacks
... you know, "F Elon."
- JCJason Calacanis
And Elon responded-
- DSDavid Sacks
Now she works-
- JCJason Calacanis
... "Message received." (laughs)
- DSDavid Sacks
Yes, and he left. Uh, great, great move for, for the state. So she is now running one of the biggest unions, and what sh- she said is that this bill will move California closer to the labor model used in Europe where unions negotiate, the unions are still negotiating for wages and work conditions, but in an entire sector with some sort of government board rather than company by company. So in other words, it's too slow to unionize, you know, company by company. They would just wanna unionize entire sectors of the economy. Now, the thing that's really crazy about this minimum wage proposal is that, like you said, Jason, it isn't just that they set a minimum wage. They created a 10-person panel, so there's a new government agency that's gonna regulate fast food, the fast food industry. You know they're not gonna stop at minimum wage. It's gonna be work conditions. So now you're turning fast food restaurants into a highly regulated part of the economy. And the weird thing is it's not even just all fast food. It's basically chains that have more than 100 fast food restaurants nationally. So in other words, if you're a local operator of two McDonald's, you'd be subject to this 10-person board. But if you own 20 restaurants that aren't part of a national chain in California, then you're not. And so the weird thing is that some workers in the fast food industry could get this new minimum wage of $22, where other... whereas other workers who work for, you know, they're not part of a major chain would get the statewide minimum wage of 15. So it's, it's, um, it's kind of unfair in that some parts of the restaurant industry are being regulated and others aren't.
- JCJason Calacanis
Well, is there any justification here that you can think of to not let the free market do its thing, Friedberg?
- DFDavid Friedberg
Well, if you represent the workers, you're saying, "Hey, pay them $22," and you can. And here's what that points out. It actually points out that there's probably a pretty big business flaw in a business that's so reliant on commodity labor. And that business, in and of itself, is not as valuable as you might have thought it was before. Think about it this way. There's a company called McDonald's, and then there's another company called McDonald's Labor. And what happened before is McDonald's employed people who do work at McDonald's. And maybe what happens in the future is all those people are looking left and looking right and they're like, "You know what? McDonald's has nothing without us. We are the business. We deserve the value." So in terms of how much of the value of the business flows to the shareholders of McDonald's versus the employees that work at McDonald's, the employees that work at McDonald's are saying, "Let's go do a startup. And our startup is called Union. And our business that's called Union is now gonna provide a bunch of services to McDonald's. And those services, we're gonna start to value capture what they're doing." And it indicates that maybe there's something inherently, um, disadvantaged in that model. And it could be that the argument could be made that that business in the early 20th century, um, in the late, um, 19th century, yeah, the 19th century, early 20th century and beyond, that you could build a good advantaged business because there was such an eager, hungry workforce, people looking for work. The people would come and work for a nickel an hour or whatever. And so you, as a business owner, could make a lot of money doing that. You could sell a product for a dollar, pay people five cents to make it for you. But nowadays, those people are looking left, they're looking right, and they're like, "Wait a second, we are the business," or, "We're 90% of the value of this business." And so a couple things will happen. Number one is the inherent business model of a company that's so dependent on commodity service is gonna be flawed and challenged in the 21st century and fast food restaurants aren't gonna be as valuable, businesses that rely on commodity service are not gonna be as valuable. Number two, businesses are gonna automate. So new businesses will emerge that actually do the fast food work or do the car building work or do the dock loading and unloading work that are automated, and they'll have an inherent advantage in the economy and they'll win. And I think number three is that in the near term, consumers will suffer because prices will go up 'cause someone has to pay for the incremental cost of running this unionized business, and that will ultimately be the customer of that business. I'll say the fourth point is I am concerned about this sort of behavior in regulated spaces where the government has actually control over the market itself. So this i- a good example of this is th- you know, we had, um, uh, um, our friend Ryan from Flexport on a few times, but you can't just start up a shipping company and have a dock. The docks are run by the cities and they're run by the state. And so those docks, access to those docks, access to that market is regulated by the government. So then what happens is the union, right, the, the labor company can actually have regulatory capture through the government of a segment of the economy, and that's where things start to get dangerous. So look, I'm all for unions if they want to show that a business...... is reliant on a commodity labor force and commodity service, and they all band together and start a startup. I mean, that's what we do. We all start a company-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... and go and compete. But the-
- JCJason Calacanis
Right.
- DFDavid Friedberg
... issue is then when the government creates regulatory capture over a segment of the economy and make it difficult for the free market to ultimately do its job of either automating or creating a newly advantaged business model, or all those things that allow us to progress.
- JCJason Calacanis
Automating is coming. Uh, a couple of us made a bet on a crazy idea of, like, automated, uh, robotic coffee (laughs) called Cafe X. Uh, not to talk our own book here, and the company really struggled during the pandemic, but they have two units at SFO. Chamath, they're doing 70... Uh, $73,000 in two units (laughs) last month. And I'm like, "Wow, the, the, the company figured it out," and there's another company doing french fries.
- CPChamath Palihapitiya
This is the, this is the sad thing that California doesn't realize is, like, I think that the folks writing these laws have just an extremely poor understanding of economics and capitalism, um, because the first thing that it does effectively, and everybody can understand this, is it caps the profitability of a company, right? Because it effectively says if you look at an industry that is over-earning, then this council will essentially see money that should be reappropriated to employees. Now, that idea is not necessarily a bad thing. For example, you see that all the time in technology, right? If you look at the EBITDA margins of, like, big tech and how they've changed, they've actually eroded over time as the companies have had to generate more revenue because employees demand more and more of those gains.
- JCJason Calacanis
Right.
- CPChamath Palihapitiya
That's an implicit part of how the free market economy works in technology. So, you know, if you don't feel like you're getting paid well at, you know, Google, you go to Meta, and you get paid more and vice versa. So there's a natural effect of people being able to do that in certain markets. But when you impose a margin and essentially say, "You can only make 10% because the rest of these profits I'm giving to these folks because I've imputed their new wage to be something that's much greater than what they were paying before," the unfortunate thing is what Friedberg said, which is that you will rebuild that business without those people, because it is the rational thing to do. And so unfortunately, what you'll do is you'll take a bunch of people that should be in the economy, right? Think about, like, new immigrants or young people that are first getting on their feet. They'll take these jobs, you know? I mean, I worked at Burger King-
- JCJason Calacanis
First-run jobs. Yeah.
- CPChamath Palihapitiya
... I worked at Burger King when I was 14. That's how I got my first-
- JCJason Calacanis
That's how I got my first... Yeah.
- CPChamath Palihapitiya
You, you, you... Those jobs won't be there to be had, and that has ripple effects as these folks get older or try to get more ingrained in the economy. And this is what I wish California would understand is that these things aren't free, and even though they seem like you're coming to someone's rescue, there's all kinds of unintended consequences-
- JCJason Calacanis
Yeah.
- 40:15 – 52:00
Zuckerberg on Rogan, FBI interference with the Hunter Biden laptop story
- CPChamath Palihapitiya
- JCJason Calacanis
All right. We can go to raw meat for Sacks. Zuckerberg's, uh, admission of FBI meddling, Truth Social, uh, being held up in good light.
- DSDavid Sacks
Well, after you guys disputed me and like, "How dare you imply that J. Edgar Hoover and Jim Comey's FBI is politicized." Remember you guys were debating and someone got very shocked?
- JCJason Calacanis
No, I said you guys. That was about the, uh, investigation.
- CPChamath Palihapitiya
I didn't say that.
- DSDavid Sacks
I didn't, you didn't, but some of you were saying, "I can't believe, Sacks, that you're part of the 35% of Americans who don't believe fully in the rectitude and integrity of the FBI." And then, you know, a-
- JCJason Calacanis
But I mean, I, I don't know if this is FBI meddling-
- DSDavid Sacks
And now, and now comes this bombshell.
- JCJason Calacanis
Yeah.
- DSDavid Sacks
I mean, you gotta admit, this was a bombshell.
- CPChamath Palihapitiya
What was the bombshell?
- JCJason Calacanis
Okay, so-
- CPChamath Palihapitiya
I was not paying attention.
- JCJason Calacanis
... so I'll, I'll cue it off here. Okay, so Joe, uh, Joe Rogan had Zuck on, and they, he asked him about this very specific thing. Remember the New York Post story on Hunter Biden's laptop, in like the week or two before the election, was censored, right? And it was a very controversial thing because the FBI was dealing with known, uh, Russian interference and hacks and all this stuff, uh, part of which Trump was like asking people to hack other candidates.
- DSDavid Sacks
Okay, you're not even setting this up correctly.
- JCJason Calacanis
Well, okay-
- DSDavid Sacks
You're like-
- JCJason Calacanis
... I'm gonna keep going, and then so this is what Zuckerberg said, "Hey, look-"
- CPChamath Palihapitiya
Let, let's give, let Sacks moderate this segment. (laughs)
- JCJason Calacanis
(laughs) Well, I mean, I'm just gonna read The Federalist which is, you know, a super right wing-
- DSDavid Sacks
I mean-
- JCJason Calacanis
But he says, I'll just read you what Zuck said, 'cause that's, says it all. He says, "Hey-"
- DSDavid Sacks
Fair enough.
- JCJason Calacanis
"... Look, if the FBI, which I still view as a legitimate institution in this country..." I'm, I'm quoting from The Federalist, which is quoting him from Joe Rogan, um, "It's a very professional law enforcement. They come to us and tell us we need to be on guard about something, I want to take it seriously. So, uh, when The New York Post broke the Hunter Biden laptop story on October 14th, 2020, Facebook treated the story as potentially misinformation, important misinformation, for five to seven days while the tech giant's team could determine whether it was false or not. During that time," uh, this is The Federalist speaking, "decreased its depo- distribu- Facebook decreased distribution of the story by making the story rank lower in the newsfeed." And this is his quote, Zuckerberg's, "You could still share it, you could still consume it," Zuckerberg explained, but, quote, "fewer people saw it than would have otherwise." And, "While he would not quantify the impact, the Facebook founder said the decreased distribution was," quote unquote, "meaningful." In a followup, Rogan asked, "If the FBI had specifically said...... quote, "to be on guard about that story," meaning the laptop story. After originally responding, "No," Zuckerberg corrected himself. He says, "I don't remember if it was that specifically, but it was basically the pattern." So basically, I guess you would agree, Sachs, Zuck didn't know exactly what to do here with this information, um, and if it was real or not, which, you know, it turned out to be very real. And it probably could have swayed the election. I mean, I do think if people thought there was a connection between Hunter Biden, maybe it could've. Um, I don't know if we want people being hacked to do that. So what's your take on it, Sachs? Y- uh, you know, just hacking in general and, and this specific thing. What should the FBI do if these kinda hacks are getting released of people's families? Should they-
- DSDavid Sacks
Okay. So-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... here, here's what actually happens. So-
- JCJason Calacanis
It's a complicated issue, right? There's many vectors, yeah.
- DSDavid Sacks
What Zuck basically says, the FBI came to, to them and encouraged them to suppress the story, or to suppress a story that they described that would be just like this, okay? So now, look, a lot of conservatives are dragging Zuckerberg and Facebook for doing, for doing the FBI's bidding. But I think a lot of people, I think most people in Zuckerberg's position, would've believed the FBI. When the FBI comes to you and says, "You're about to be targeted by Russian disinformation. You need to do something about it," you would've listened to the FBI. He believed the FBI. My point, and so I don't blame Facebook too much for that. I think it's understandable that he would've believed them. The issue here is the politicization of the FBI. Look, let's back up. What was happening? So the New York Post gets this story about the leaked contents of Hunter Biden's hard drive. In response to that, you had 50 former security state officials, uh, uh, many of whom were Democratic partisans, like Clapper, like Brennan, they signed a letter saying that this story has all the hallmarks of Russian disinformation. Now, the truth is, they had not inspected the hard drive. They simply said this has the hallmarks of it. And as a result of that, we thought that the social networks and so forth censored the story, okay? Now it turns out that the FBI... By the way, the FBI had the hard drive. They had the hard drive for over a year. It was in possession-
- JCJason Calacanis
They had an image of the hard drive or the actual hard drive?
- 52:00 – 1:06:04
Balancing fighting climate change without harming the economy or national security, EU energy policy failure
- DFDavid Friedberg
your, uh, what's your point of view on climate change, the impact it will have on the planet, and whether, like, urgent action is needed?
- DSDavid Sacks
Listen. I'm not an expert in that area. I'm not gonna pretend to be. I do think that, um, that we can't save the planet by destroying the economy. And it seems to me that too many of the save the planet people, like, wanna take reckless, extreme actions that would wreck our economy. You just saw, actually, Elon just gave a talk that's, uh, it made news this past week, from Norway, where he said that we still need oil and gas. He's the leading innovator in basically moving to solar-
- DFDavid Friedberg
I don't disagree with you. I don't disagree with you, but, but-
- DSDavid Sacks
... and renewables. And he said, "Listen. Unfortunately, we gotta rely on oil and gas because it's too important for civilization. If we cut the stuff off too quickly, we end civilization."
- DFDavid Friedberg
Yeah, and the, and the, uh-
- DSDavid Sacks
So, look, I mean, I think this is a long-term problem, but I... and I think we need to have long-term solutions.
- JCJason Calacanis
You believe in global warming? Just full stop? The, the planet is warming? You agree with the science?
- DSDavid Sacks
It seems to be. Sure, it seems to me.
- DFDavid Friedberg
It's not just about warming. J- just, just, just to use a different term, that there are more frequent extreme events that can severely, uh, hurt people, hurt the economy, hurt the food supply, hurt the energy supply, all the things that... You know, I think we're, we're, like, all the way on the bottom of Maslow's hierarchy. Like, these are the things that are most critical that, that they're starting to get disrupted in a pretty severe way. You know, I think that, that's, that's... I mean, that's the big question. So, Sax, it, it's... I think it's becoming... And, and this is where the transition starts to happen, that a lot of people kind of say, "Hey, over the long run, the temperature's gonna go up by one degree Celsius. Over a century, you know, who cares?" But there are kind of-
- DSDavid Sacks
The, the problem, the problem is this, is that, you know-
- DFDavid Friedberg
And by the way, I don't disagree with your comment-
- DSDavid Sacks
... whenever, whenever somebody like me points out how insane some of these policies are-
- DFDavid Friedberg
I... But Sax-
- DSDavid Sacks
... the topic is shifted to, "Are you a denier of some science or other?"
- DFDavid Friedberg
No. No, no.
- DSDavid Sacks
Listen. My point is not about the science. My point is, look at the collapse of the Sri Lankan economy because they implemented these ESG rules on fertilizer. Look at what's happening to the Dutch farmers who are being put out of work because of ESG rules.
- DFDavid Friedberg
And California, California today, Goven- Governor Newsom today said, "Please don't use your electric power to charge your electric cars," a week after they said, uh, gas cars are now gonna be banned in the state. And so there's a, there's a deep irony-
- JCJason Calacanis
The grid is gonna go... Yeah.
- DFDavid Friedberg
There's a deep irony underway today in California because... And Fox News has obviously latched onto this story that, uh-
- JCJason Calacanis
That has to do with the grid, though.
- DFDavid Friedberg
Yes.
- JCJason Calacanis
I mean.
- DSDavid Sacks
Look, I've, I've become suspicious-
- JCJason Calacanis
Grid demand because America doesn't care.
- DSDavid Sacks
... whenever, whenever politicians invoke some crisis as the re- as the reason for some authoritarian-
- DFDavid Friedberg
But I'm not talking about the political response.
- DSDavid Sacks
... measure-
- DFDavid Friedberg
I'm not talking about the political response. I'm... Yeah.
- DSDavid Sacks
... I've learned to distrust it. That's the point. And so-
- DFDavid Friedberg
I guess I'm talking to you-
- 1:06:04 – 1:13:21
Besties reflect on Mikhail Gorbachev's passing
- CPChamath Palihapitiya
- JCJason Calacanis
Okay. So, uh, Gorbachev, the last ruler of the USSR, uh, passed away this week. Sacks, your thoughts?
- DSDavid Sacks
Yeah, I mean, I think this was a real milestone. Um, you go back to the 1980s, and, uh, Ronald Reagan, the, who had spent his entire, uh, career being a Cold Warrior, um, saw the opportunity to basically do business with, with Gorbachev. Margaret Thatcher had told him that, "This is a man we can do business with." Gorbachev had come to power in 1985. He had initiated reforms of the Soviet system. He was a communist, to be sure, but he introduced political reforms called glasnost, and economic reforms called perestroika. And Reagan sees the opportunity to go meet with him, and they signed Arms Control Treaty after Arms Control Treaty, and ended the threat of mutually assured destruction that the world had been living with since the beginning of the Cold War. You got to remember that, you know, the Cold War began shortly after World War II, and we had this doctrine of mutually assured des- destruction, or MAD, and the whole world was living under the shadow of nuclear annihilation. This was showed, uh, repeatedly when I was a kid. Um, there was a TV movie called, um...... the day after.
- CPChamath Palihapitiya
Yeah, uh- The day after. Do you guys- It was scary as hell.
- DSDavid Sacks
Do you remember The Day After? It was really scary.
- CPChamath Palihapitiya
The Day After, yeah. Oh, lord. Yeah, The Day After. Yeah. They terrorized us that-
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
... America-
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
... and we're all gonna die. We had... Did you ever have nuclear, uh, bomb drills where you had to get under your desk?
- DSDavid Sacks
Yeah.
- CPChamath Palihapitiya
We- we had them.
- DSDavid Sacks
I mean, so-
- CPChamath Palihapitiya
Yeah.
- DSDavid Sacks
Yeah. So if you're like our age you remember this. That- that movie, by the way, that- that was a TV event movie that was one of the- the most widely watched movies. But there were others. You know, Jim Cameron used this concept in- in the Terminator movies. Um, you know, it was something that people were really afraid of. And Reagan seized the opportunity. He thought fundamentally that, uh, nuclear deterrence was immoral, that yeah, better to have deterrence than a nuclear war, but that he... if he could, he would seize the opportunity to negotiate the end of the Cold War. And, by the way, there were hardliners in his administration who did not want him to negotiate with Gorbachev, but they ended up doing a series of, uh, meetings. Uh, it culminated in 1986 at the Reykjavik Summit, and they signed, uh, deals to remove, uh, th- you know, these- these INF system deals. Now... A- and that ended the Cold War, and then basically what happened is in 1989, the- the Berlin Wall came down, Gorbachev allowed the Western... the Warsaw Pact countries to leave, and then in 1991, the Soviet Union collapsed. So, you know, he gets a lot of credit for being willing to reform that system. Now, the sad thing is, if you were- fast-forward 30 years later, where are we today? We're back in a new cold war with Russia. I mean, the- we've been spending a good part of this year talking about the threat of a nuclear use. And, you know, this was a problem that we thought was solved 30 years ago, um, and now we're back with it today. And you've gotta ask, have the successors of, you know, Reagan and- and- and George Herbert Walker Bush, the people who inherited our foreign policy over the last 30 years, have they done as good a job a- um, as Reagan did? Reagan ended the Cold War. We are back in a new cold war. Why? What is the reason for this? There's been a- a- a series of stupid policies that now have put the risk of nuclear war back on the table.
- CPChamath Palihapitiya
My interest in Gorbachev is slightly different. Um, he is an incredibly important character, uh, of the second half of the 20th century. Undeniable. You know, won the Nobel Prize, as you said, David, kind of ended the Cold War. But the most important thing, in my opinion was, the precursor to perestroika and why he did it. And as you said, like, you know, this is a fairly ardent communist, although he had really interesting views, like, he ran a very kind of, like, open, um, kind of politburo where folks could debate and he, uh, you know, promoted a lot of young people from within. All of these interesting things. But the most important thing, and he's written about this a lot, is the reason that he embarked on perestroika was because USSR at the time had an incredibly poor work ethic, terrible productivity, and horrible quality goods. And I think that there's something to be learned by that, because at the tail end of communism, essentially where you had central planning, central imposed economic principles, what happened? People did not feel that they had any ownership in the outcome. No agency, yeah. No buy-in. No agency whatsoever. Mm-hmm. And I think that there's a really important lesson to observe there, which is that if governments get too actively involved, this doesn't just happen in Russia, it happens everywhere and- It's happening in California. (laughs) We just talked about it. ... it's happening, it's happening where we live right now. And if you look at then what happened afterwards, it became the aristocracy that basically ruled the USSR before, and then fighting against all these folks that wanted reforms, and that created the schism which then perverted capitalism for, you know, seven or eight years through Yeltsin until Putin got there. And that's what created the oligarch class and, you know, really exacerbated a bunch of wealth capture by a handful of folks that may or may not have deserved it, and I'm not gonna judge that. But I just think it's really important to understand that he was forced to embark on this, because of-
- DSDavid Sacks
Right.
- CPChamath Palihapitiya
... all of these state central planning policies. And so it's just an important lesson for Americans and democracy- Yeah. ... which I don't think- Be careful. If you want more government-
- DSDavid Sacks
Y- y- you're-
- CPChamath Palihapitiya
Nanny states don't work, guys. ... you might get more government. Nanny states do not work.
- DSDavid Sacks
You're- you're exactly right. The Soviet Union, their economy used to run on what they called five-year plans. It was incredibly centralized, it was all run by the government and, you know, this was communism. And the 20th century, the second half especially, was a giant battle of systems, not just of countries, not just the Western bloc, um, you know, led by the US, the Free World versus th- the Soviet Union and the Warsaw Pact. It was also a battle of philosophies and systems. It was the philosophy of state control versus freedom and, uh, and a free economy. And freedom won, you know, the free economy won in that battle. And the crazy thing is, 30 years later, we're talking about socialism being a viable doctrine. You have politicians basically saying that they are socialists, but 30 years ago, you would've been like, "That was unelectable."
- CPChamath Palihapitiya
But the thing, a- and- and the- and the point is, example after example, empirical evidence well-documented of just how it doesn't work. And I guess the thing is, you know, we all say like, "You just have to learn it for yourself." You know, like, you'll tell your kids to do- Yeah, I know. ... to not do something ad infinitum. They gotta touch the stove, yeah. They gotta touch the stove themselves and get burned. We are about to go do that in California and- Can you imagine if, like, people who want to be socialists here (laughs) find, if they had to be in a food line or have rations? Literally, Russia had food lines and they were rationing food in the 1980s. Like, that's how dysfunctional it got. Well, you have to- you have to think of it like- Yeah. ... a- a large driver of Gorbachev basically negotiating these peace settlements with, you know, with Reagan and this nuclear, you know, uh, demilitarization was in part because he knew he couldn't fight.... right?
Episode duration: 1:23:01
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