Death of the Middle Class: Billionaire vs Entrepreneur DEBATE - Daniel Priestley v Nick Hanauer

1. 0:00 – 2:27

   Intro

   1. NHNick Hanauer0:00

      There is literally no example on planet Earth of a high-functioning society without big government

   2. DPDaniel Priestley0:06

      No, no, that's not true. Big government is sucking the life out of small businesses, and I've spent countless hours with businesses, and they're like, "You can't succeed in the UK. As soon as you earn anything, they'll just tax it off you."

   3. NHNick Hanauer0:17

      So pop off to Dubai, run the business virtually, and pay no tax. It's idiotic. I, I don't know how you can look at that and think this is a good system.

   4. DPDaniel Priestley0:26

      No, no-

   5. NHNick Hanauer0:26

      Yeah

   6. DPDaniel Priestley0:26

      ... I'm saying what needs to happen is reduce the taxes and the pressure on the small businesses, 'cause everyone in this economy needs to own stuff. We need to own a house, own a business, and own shares.

   7. SBSteven Bartlett0:35

      But not everybody can be an entrepreneur.

   8. NHNick Hanauer0:37

      Correct. Look, it would be wonderful if everybody owned something, but ownership starts with earning enough money so that you can save money so that you can begin to own something. So the problem is wages, because most people wanna be able to go to work and be treated decently. I wanna earn enough money so that I can feel secure. I just wanna be married and-

   9. DPDaniel Priestley0:56

      Have kids, own a house

   10. NHNick Hanauer0:57

       ... all that. That's what-

   11. DPDaniel Priestley0:58

       I hear you

   12. NHNick Hanauer0:58

       ... most people want

   13. DPDaniel Priestley0:59

       I want that, and I want that for everyone. That's gone away. Houses are unaffordable. Local jobs don't exist. Technology has cut out all the middlemen. No one's paying healthy wages. We have the most unhappy population.

   14. NHNick Hanauer1:10

       And if you wanna fix that, you have to enact this.

   15. DPDaniel Priestley1:13

       Well, I've seen Nick's policies implemented, and I don't feel it's enough.

   16. NHNick Hanauer1:16

       You haven't seen all the policies, [laughs] so.

   17. DPDaniel Priestley1:18

       But we need people to know that the rules that we grew up with have changed, and people have to learn the rules of this new economy.

   18. NHNick Hanauer1:24

       Yes. Yes. Yes. I totally agree, and if you wanna get the economy back on track, the starting point is-

   19. SBSteven Bartlett1:33

       This is super interesting to me. My team give me this report to show me how many of you that watch this show subscribe, and some of you have told us, according to this, that you are unsubscribed from the channel randomly. So favor to ask all of you, please could you check right now if you've hit the subscribe button if you are a regular viewer of the show and you like what we do here. We're approaching quite a significant landmark on this show in terms of a subscriber number. So if there was one simple, free thing that you could do to help us, my team, everyone here, to keep this show free, to keep it improving year over year and week over week, it is just to hit that subscribe button and to double-check if you've hit it. Only thing I'll ever ask of you. Do we have a deal? If you do it, I'll tell you what I'll do. I'll make sure every single week, every single month, we fight harder and harder and harder and harder to bring you the guests and conversations that you wanna hear. I've stayed true to that promise since the very beginning of The Diary of a CEO, and I will not let you down. Please help us. Really appreciate it. Let's get on with the show. [upbeat music]

2. 2:27 – 6:27

   Why Nick Hanauer's Economic Views Matter

   1. SBSteven Bartlett2:27

      Nick, I wanna start with your background and your context-

   2. NHNick Hanauer2:30

      Okay

   3. SBSteven Bartlett2:30

      ... so I can understand your perspective and who you are. You sold a, a company for almost seven billion dollars.

   4. NHNick Hanauer2:35

      Correct.

   5. SBSteven Bartlett2:36

      And what's so fascinating about you is you... Typically, billionaires h- have a certain narrative and perspective on the world.

   6. NHNick Hanauer2:43

      Yeah.

   7. SBSteven Bartlett2:43

      You seem to have a very different one.

   8. NHNick Hanauer2:45

      I do.

   9. SBSteven Bartlett2:46

      Who are you, where have you come from, and what is your perspective on the world as it relates to the subjects that you know we're gonna discuss today?

   10. NHNick Hanauer2:51

       I was raised in a civic family, I should say.

   11. SBSteven Bartlett2:54

       What does that mean?

   12. NHNick Hanauer2:55

       Uh, it means a family that takes, uh, civic responsibility seriously. Uh, but we were m- middle-class people, and my father started to work for this tiny, uh, family business that, uh, his, his father had started manufacturing bed pillows and down comforters, which is how I got my start in business. And to make an incredibly long story short, I had a very early intuition, uh, about the internet, uh, and, uh, the role that it would play in commerce. And as luck would have it, I had a friend who agreed with that proposition, and his name was Jeff Bezos. And so he wanted to start an e-retailer. He was working in New York, uh, uh, for a hedge fund, uh, dating one of my closest friends, and for a variety of reasons, he ended up sending his stuff from New York to Seattle to my house, and we started amazon.com together. But from that, started starting other tech companies. You know, I've helped run, you know, manufacturing businesses, e-commerce businesses. My friends and I own a bank. You know, like, the... You know, and I think that that very broad perspective on markets began to inform an intuition that everything that people are taught about economics today, that sort of the conventional v- view, is a pack of lies, and that if you take it seriously and enact policy on the basis of it, the only thing that can happen is that the rich will get richer and everyone else will get poorer. And, uh, you know, a signal piece of that evidence for me, uh, sort of a thing that really sort of galvanized my interest, was that I got a look at the IRS tax tables in two thousand and seven, two thousand and eight, which showed American income shares and the history of that. And in nineteen eighty, the top one percent of Americans shared about eight and a half percent of national income. Uh, by two thousand and seven, that eight percent had grown to twenty-two percent, as I recall, so triple largely, as a share of national income, while the bottom fifty percent of Americans, their share fell from about eighteen percent in nineteen eighty to twelve percent in about two thousand and seven. And what I did is I took those numbers and I stuck them in a spreadsheet and said, "What happens if this c- trend continues for another thirty years?" And the answer is revolution. [laughs] You know, it just, it's just arithmetic, because you cannot sustain a capitalist democracy if the top one percent controls forty-five or fifty percent of income and the bottom fifty percent shares five. This is not a deep political insight. [laughs] This is just math. And I, and I freaked out and decided that I needed to devote myself to trying to figure out why this happened and how you could, how you could fix it. And so I have been writing about this and working on it since then.

   13. SBSteven Bartlett5:53

       Why did this feel so important to you? I've heard you talk about pitchforks.

   14. NHNick Hanauer5:57

       Even a cursory reading of history will tell you that when societies getAs unequal as the societies we now live in, ah, terrible things start to happen. This leads to either a police state or a revolution. And I believe that the pitchforks are here. I think the Trump administration is the, is the, you know, one of the canonical examples of a society beginning, beginning to tear itself apart. And I just think it's the responsibility of people with power and resources to do

3. 6:27 – 8:32

   Daniel Priestley's Different Take On Wealth

   1. NHNick Hanauer6:27

      the right thing.

   2. SBSteven Bartlett6:28

      Dan, same question for you.

   3. DPDaniel Priestley6:30

      Yeah, I grew up in Australia, and, um, as a teenager, I discovered entrepreneurship. I got an entrepreneurial mentor, uh, very early on, and I did two years in a startup, and it was really exciting, and I loved it. Um, and I felt like I'd discovered a cheat code in life, which was entrepreneurship and starting businesses and small businesses. And then at 21, I went off and started my own company, which was my first agency, and it grew really rapidly. Uh, went from zero to a million in its first year and then 10 million in year three, and it was, like, this exciting, young company with all these cool young people, uh, working there and, and living there. [laughs] We actually kinda did.

   4. SBSteven Bartlett7:02

      [laughs] Yeah.

   5. DPDaniel Priestley7:02

      Yeah. We actually were in a big house, and we kind of spent a lot of time together. Yeah, I just fell in love with entrepreneurship and small business and family business and all of those kind of things. And I also, 15 years ago, started an entrepreneur accelerator where people who wanna get together and talk about entrepreneurship and figure out how to run their businesses can get together and, and figure out how to do that. Um, so for the last 15 years, I've spent, uh, countless hours with, uh, five and a half thousand businesses all over the world who are getting together, talking about how entrepreneurship works. And over the years, I've also come to a similar conclusion that the technological revolution that we've seen in the last 25 years has hollowed out the middle class. And I basically said, "I can't play by the rules that I grew up in. I have to learn the rules of this new economy, this digital economy pretty quickly, or else I'm gonna be displaced and disrupted, um, and I don't have a fallback position." I, I didn't come from any form of wealth or money. Um, I also didn't take on any venture capital. I self-funded, bootstrapped, uh, my own businesses by cobbling together credit cards and things like that. And yeah, I, I think one of the things that I really, truly believe is that we are in a very big danger at the moment, that if more people can't participate in the benefits of capitalism, they're gonna do crazy things and vote in socialism.

   6. SBSteven Bartlett8:14

      Correct.

   7. DPDaniel Priestley8:15

      Uh, and the pitchforks will come, and inequality is gonna be a toxic, corrosive force, uh, in the economy. So, like, I'm a capitalist who wants lots of people to benefit from capitalism. That's been my whole shtick for forever. Um, and I just want to include more people in the benefits of capitalism before we do, do

4. 8:32 – 11:44

   Is Taxing The Rich The Answer?

   1. DPDaniel Priestley8:32

      dumb things.

   2. SBSteven Bartlett8:32

      And I guess the question therefore is how? How do we do that? The prevailing narrative, and I think one of the most dominant narratives, is we need to tax people like us a lot more. What's your view of that, Daniel?

   3. DPDaniel Priestley8:43

      So it's very easy to have a bad guy of a rich person. Uh, so you could imagine this billionaire rich person, right? Nick maybe could be a bad guy.

   4. NHNick Hanauer8:51

      Yes.

   5. DPDaniel Priestley8:52

      Uh, and you could so do that. When I look at the economy and what's draining it out, um, it's, it's harder to conceptualize, but we have these mega corporations, and we have these mega funds. So here in the UK, all the houses are being bought up by BlackRock, a massive private equity fund that wants the entire population to be a rental class forever. And, you know, our prime minister has walked down Downing Street hand-in-hand with the CEO of this big fund saying, "Yeah, come in and, and buy up stuff, um, and financialize houses." And that is causing a lot of trouble. And then you've got big companies like Microsoft, like Amazon, and they say, "Hey, we wanna do business in your country, but we don't wanna pay tax there. We wanna pretend that we're in Luxembourg, or we wanna pretend that we're in Ireland."

   6. SBSteven Bartlett9:37

      Yes.

   7. DPDaniel Priestley9:37

      "And we're gonna send something from our British warehouse to our British consumer, but we're not really in Britain at that time, so we don't pay tax." And then you've got Starbucks that says, "You know, we, we wanna do business and sell coffee next to a mom and dad family business coffee shop, but we have to pay this license fee for the Starbucks logo, and that has to go to Bermuda and..." You know, so, so when I look at who's hollowing out the middle class, you've got massive MegaCorp businesses, uh, that are the absolutely bigger than we could have ever conceived them to be. They're as big as nations now. Um, and you've got MegaCorp funds, which are also trillion-dollar funds. And one thing I'm worried about is that a lot of people think that a guy like me, who's a, basically a dynamic entrepreneurial person, uh, or even a billionaire like Nick, is the enemy. And you know, when you get a d- a James Dyson who invents a cool vacuum cleaner and sells a lot of them, that's not the enemy. When you get, uh, Paul McCartney, who writes a bunch of songs and becomes a famous Beatle and makes a billion dollars, that's not the enemy. The enemy is the financialization of our homes. The enemy is big MegaCorps that don't wanna pay tax, and that's where we need to-- we need to be a little bit more nuanced and clear who's hollowing out the middle class and how do we make policy choices to make sure that doesn't happen.

   8. SBSteven Bartlett10:52

      So you're saying taxing the rich isn't the answer.

   9. DPDaniel Priestley10:54

      Taxing the rich is like a headline-

   10. SBSteven Bartlett10:56

       Yeah

   11. DPDaniel Priestley10:57

       ... that creates enemies who aren't actually the enemies.

   12. SBSteven Bartlett11:00

       But so let's just say in the UK then, if you were prime minister, would you increase the tax rate on the top 1%?

   13. DPDaniel Priestley11:06

       You could do that for political reasons 'cause it would make people feel good, but it won't change the economy. What needs to happen is we need a thriving entrepreneurial class. We-- Small businesses are the answer. The biggest mistake the, the UK government is making is they don't see that the 5.7 million small businesses are their biggest asset, that we could get those going, that we could create an entrepreneurial uplift that would create jobs, and it would create better opportunities. I would definitely curb the issue that we're having with these, uh, mega funds, and I would definitely stop pretending that Amazon is in Luxembourg and Google's in Ireland, right? So those sorts of things I would definitely

5. 11:44 – 15:07

   Do The Wealthy Already Pay Enough Tax?

   1. DPDaniel Priestley11:44

      do.

   2. SBSteven Bartlett11:44

      What about yourself, Nick? Would you-

   3. NHNick Hanauer11:45

      So-

   4. SBSteven Bartlett11:45

      Would-- Do you want the top 1% to pay more taxes? Is that important?

   5. NHNick Hanauer11:48

      So it is not true that the richest people in the United States pay a lot of tax because the, the American tax system is riddled with loopholes that allow the richest citizens to pay taxes at a rate of one half of what ordinary people pay. I absolutely believeThat in a high-functioning democracy, the wealthiest citizens will pay taxes equal to or greater than the typical citizen. And that is just objectively not the case in the United States.

   6. SBSteven Bartlett12:21

      As a percentage.

   7. NHNick Hanauer12:22

      As a percentage. And I think that that is, you know, sort of table stakes in making an economy function and a democracy go. But it is not the biggest problem. The problem is wages. So here's the most important socioeconomic fact in the United States, that the median full-time worker today earns in the range of $60,000 a year. If that person had maintained their same share of the economy since 1975, instead of earning $60,000 a year, they'd earn close to $120,000 a year. That effect, by the way, goes up to the 90th percentile. If you earned $180,000 in 2018, 2020, if you had maintained your same share of GDP, instead of earning $180,000, you'd earn like a $250,000 a year. So in the United States, over 50 years, the only people who benefited directly from economic growth and productivity gains were the people in the top ter- 10%, and the majority of benefit went to the top 1%. And that is the problem. And that is trillions of dollars a year that used to be wages for ordinary Americans and now ends up in the pockets of the richest people, by the way, utilizing precisely the mechanisms that Dan just outlined. And what we have done is we have massively tilted the economic playing field, uh, uh, which once favored small and medium-sized businesses and local companies towards these giant corporations. We used to have an economy that actively encouraged small businesses and entrepreneurship. I mean, basically what we call neoliberalism, this set of ideas around economic cause and effect that came into force in the '70s and '80s, Reaganomics, Thatcherism, all this stuff. Cut taxes for rich people, deregulate powerful people, and, uh, suppress the wages for working people, basically trickle-down economics. Those policies went in, went into effect in the '70s, '80s, and '90s. And what happened is a huge shift in concentration from smaller businesses to bigger businesses and a huge, uh, shift in income from ordinary Americans to v- the very rich. And that's the core of the problem. And of course, I think rich people should pay their fair share. We should-- It, it is ridiculous for somebody who make, uh, half a billion dollars a year and to pay 15% tax rate, uh, somebody makes $200,000 a year pays 40. I just think that's stupid and wrong, which is, which is the case in the United States, may not be the case here in the UK. But the bigger problem is wages, and if you want to get the economy back on track, you have to address that

6. 15:07 – 20:05

   Entrepreneurship Vs Policy: What Works Best?

   1. NHNick Hanauer15:07

      problem.

   2. SBSteven Bartlett15:07

      Dan, you say that optionality and entrepreneurship will do more to raise wages than any government policy.

   3. DPDaniel Priestley15:12

      Yeah. So I believe that optionality is the, is the most important thing. Uh, when someone has lots of options, then they don't accept terrible conditions. So-

   4. SBSteven Bartlett15:20

      Give me, give me some color on that.

   5. DPDaniel Priestley15:21

      Well, if I have 10 companies that are wanting to hire me-

   6. SBSteven Bartlett15:24

      Mm-hmm

   7. DPDaniel Priestley15:25

      ... I'm gonna choose the best option, right? But if I live in a town where there's only one employer-

   8. SBSteven Bartlett15:29

      Mm-hmm

   9. DPDaniel Priestley15:29

      ... like let's say there's one massive company that employs people, and you either work for that company or you're unemployed, then I have to accept whatever they're dishing out. So the most important thing in creating better quality of life is optionality.

   10. SBSteven Bartlett15:42

       Yes.

   11. DPDaniel Priestley15:43

       We, we need lots of optionality. One of the options that I want people to have is I want us to t- uh, teach entrepreneurship in schools so that people have the option to start a family business as one of their options. They may not take that option, but at least it's not a mysterious black box that they're, that they just don't understand, that that would actually be one of their, uh, one of their options. Also, let's say you had no minimum wage, but if you had 10 employers and a limited pool of people who are available to work at those companies, they're going to have to bid against each other to create better and better working conditions and better and better pay. Um, so you kind of only need to have minimum wages when there's not enough optionality. If there's enough op- optionality, it pushes everything up.

   12. SBSteven Bartlett16:23

       Is that your view as well?

   13. NHNick Hanauer16:24

       I agree with the spirit of that. It just turns out that is never the case. So there's a lot of economic theory that sounds a lot like that, but it, but exists in a, in a, in an imaginary world where people have, um, power and optionality. And, and in the real world, that actually doesn't ever exist. So can-- By way of example, there's a, there's a principle of economics, the theory of marginal productivity. Have you heard of that?

   14. SBSteven Bartlett16:56

       No.

   15. NHNick Hanauer16:57

       So that's a theory that is embedded in the, the center of econ- of economics, which says that because markets are efficient, the amount of money you earn reflects precisely the contribution that you make to it, that, that, that, that you make.

   16. SBSteven Bartlett17:13

       Okay. So if I earn $15,000 a year, that's because I'm giving $15,000 of value to the world.

   17. NHNick Hanauer17:16

       Of value in the world.

   18. SBSteven Bartlett17:17

       Okay.

   19. NHNick Hanauer17:18

       Correct. And if I earn $500 million a year rubbing money together to make more money, that is a, that is an accurate reflection of the value I'm creating in the world.

   20. SBSteven Bartlett17:28

       Which is really central to capitalism, isn't it?

   21. NHNick Hanauer17:29

       It is absolutely central to capitalism, and it is central to economic policymaking. But here's the thing. If you understand where that came from, it gives you pause. So in 1879, a guy named Henry George writes a book called Progress and Poverty in the United States. And basically, it's the first book about the rich stealing from the poor. And [chuckles] this book isn't just a bestseller, it is the bestseller in the history of the United States. And the powers that be freak out, and J.P. Morgan brings this guy, John Bates Clark, to Columbia University, which is sort of the home of, like, Wall Street and stuff like that in New York, and says, "Fix this." And so Henry George writes a book called The Distribution of Wealth, in which he invents this idea called theory of marginal productivity.Which asserts this idea, but he says the quiet part out loud in the book. He says, "Look, we have to prove to working people that no matter how much they make, whether it's a little or a lot, it reflects their value because if they conclude that their work is worth more than they are paid, they will revolt and kill us all, and that would be bad." And that idea, it will not surprise you to learn, was very attractive to a bunch of rich people and got swept up into economics, and today is a core idea in economic theory, and it would be true potentially if markets were perfectly efficient and all this optionality existed. But there has never been a case where that has been true. It has materially harmed the welfare of most people because, as Dan says, your ability to earn is related to your power to negotiate, not some magical number that the market decides. And-

   22. DPDaniel Priestley19:14

       It's, it's how easy you are to replace because if I run an ad for a job and 400 people apply for the job, right?

   23. NHNick Hanauer19:20

       Yeah.

   24. DPDaniel Priestley19:20

       Which, which really does happen.

   25. NHNick Hanauer19:21

       Yeah.

   26. DPDaniel Priestley19:22

       Um, and I know St- this happens for you, Steven.

   27. NHNick Hanauer19:24

       Right.

   28. DPDaniel Priestley19:24

       Uh, that, that essentially you run an ad and 400 people... So you don't think about raising the wage-

   29. NHNick Hanauer19:29

       No

   30. DPDaniel Priestley19:29

       ... uh, because 400 people applied, and they're all good. Like, they're all really, like, super qualified people, and this happens all the time in the UK right now.
7. 20:05 – 24:53

   The Policy Fix For Inequality

   1. NHNick Hanauer20:05

      poorer. And-

   2. SBSteven Bartlett20:05

      So what's the solution here? Is it to put a, a higher minimum wage on society?

   3. NHNick Hanauer20:10

      Well, that's a policy solution, but if you, if you really wanna solve the problem, the starting point is getting people to understand economics in a way [laughs] that actually re- reflects w- how th- how the economy actually works, not this stylized invention dating back to 1787 that if you take seriously and enact policy on the basis of it, the only thing that can happen is that the rich will get richer and the poor will get poorer, which is the story of the last 50 years.

   4. SBSteven Bartlett20:42

      So what is the policy solution?

   5. NHNick Hanauer20:44

      A policy solution is most definitely to apply a standard which requires companies to pay people, uh, you know, a living wage. So the minimum wage is a perfect example of a great policy. A, a- another policy in the United States which is really, really important is the overtime threshold-

   6. SBSteven Bartlett21:00

      Mm-hmm

   7. NHNick Hanauer21:01

      ... which I don't know whether you have here in the UK.

   8. DPDaniel Priestley21:03

      We do.

   9. NHNick Hanauer21:03

      But it's the salary threshold below which you automatically get paid overtime, which is time and a half here, too?

   10. DPDaniel Priestley21:10

       Yeah, 48 hours here.

   11. NHNick Hanauer21:11

       48?

   12. DPDaniel Priestley21:11

       48 hours is a upper limit of a week, a working week.

   13. NHNick Hanauer21:14

       Okay. So in the United States it's 40 hours, so if you work more than that, you get paid overtime. And so one of the things... So that, that standard used to apply to virtually every worker in America in 1970, 1965. Today, that standard applies to less than 10% of workers. Now, why does that matter? Because people like me at the scale of tens of millions have turned three 40-hour-a-week jobs into two 60-hour-a-week jobs and pocketed the difference. You may be doing that here, [laughs] right? You put gummy bears in the lunch room and a, and a ping pong table, and you force people to work 60 hours a week, and then you can have two employees instead of three. If you do that 30 million times, you've taken 10 million jobs out of the workforce.

   14. SBSteven Bartlett21:55

       So do you agree with this, Daniel, this approach?

   15. DPDaniel Priestley21:56

       N- not as much. Uh, well, here's, here's the issue. I agree with it at one level, but, um, almost every solution that Nick has recommended the UK's had for the last 20 years. So we have, uh, a minimum wage that is pegged two-thirds of the median, and it ratchets up. We've got 28 days worth of paid si- uh, holiday every year. We've got sick leave. We've got maternity and paternity leave. Uh, we've got, uh, the ability, uh, very, very difficult to hires- uh, fire someone if they've been with you for more than six months. So we have this unbelievable set of workers' rights and all of these recommendations from minimum wage right through to, uh, how, how to handle employment. We have the most unhappy population. Our economy's not growing. We have a million young people out of work. Uh, we have... No one's hiring at the moment. Um, so it hasn't created... Those conditions have not created runaway prosperity, and that gives me pause to think something deeper is going on. And the reason that I think this is that I think we need to make more participation in capitalism. Capitalism is about ownership. You have to own an asset. And if you don't own anything, if you're just selling labor, in the current economy with digital and AI and robots and all this sort of stuff, the real reason that the wages... 'Cause what Nick's saying is that the amount of money people would, should be earning right now is, like, in the hundreds of thousands. And what I think is happening as another major part of this is that the eco- the rules of the economy have shifted. Technology has cut out all the middlemen. Technology has hollowed out the middle class. Uh, we used to go to the video store, and the video s- rental store used to have 12 people working there, and now we just go to Netflix. Uh, and we used to go to our little local retailer and buy a CD, and now we just go to Spotify, and we just go to Amazon. So it's hollowed out all of those supply chains that used to create amazing jobs. The value of the labor has been eroded because it's very easy to outsource labor to another country. It's very easy to simplify a job down to automated parts, uh, using technology. So the fundamental value of actual labor has diminished because of technology. Technology has reduced the actual utility of this thing that we call labor, uh, for, for 90% of people.

   16. SBSteven Bartlett24:09

       And it's only gonna get worse with AI.

   17. DPDaniel Priestley24:10

       And with AI and with robots, it's going to go down. So-The, if you just simply say, "Oh, this is about lifting work standards," you're gonna miss the point that we can't compete with technology. Technology's better at this stuff than we are, and the answer, the solution, is ownership. We have to... Everyone in this economy needs to own stuff. We need to own a house. We need to own a family business. We need to own shares in the companies that are growing. So it's, y- you cannot outrun this. This is like trying to run against someone who's in a car, and they say, "Oh, you just need nicer shoes." No, you- [laughs] the shoes won't change things. We've already tried nicer shoes in the UK economy, and it's made no difference. Everyone's miserable. So that's one of the things that I... That's where you and I would disagree.

   18. NHNick Hanauer24:52

       I mean, both things can

8. 24:53 – 26:57

   US Vs UK: Which Economy Wins?

   1. NHNick Hanauer24:53

      be true.

   2. DPDaniel Priestley24:53

      Okay.

   3. NHNick Hanauer24:53

      The minimum wage in the United States is $7.25 an hour or $2.13 plus tips. It's half, it's a third of what it is here in the UK, okay?

   4. DPDaniel Priestley25:03

      But, but you have twice the disposable income that we have. Your median wage is one and a half to two times what our median wage is. We're now a poor country relative to the US-

   5. NHNick Hanauer25:13

      Yeah

   6. DPDaniel Priestley25:13

      ... and even though your minimum wage is terrible and horrific and un- inhuman-

   7. NHNick Hanauer25:18

      Yeah

   8. DPDaniel Priestley25:18

      ... however it's magically done it, your, your country and your citizens are so much richer than ours.

   9. NHNick Hanauer25:25

      Yeah, except if you consider that out of that median wage, you have to take $20,000 a year to pay for healthcare.

   10. DPDaniel Priestley25:32

       Hmm.

   11. NHNick Hanauer25:32

       Right? Like, the G-

   12. DPDaniel Priestley25:33

       I think adjusted, it's still you're 30% better.

   13. NHNick Hanauer25:36

       I, I think if-

   14. DPDaniel Priestley25:36

       Even ad- even adjusted

   15. NHNick Hanauer25:37

       ... I, I think if you look at the AIC OECD-

   16. DPDaniel Priestley25:39

       Mm-hmm

   17. NHNick Hanauer25:39

       ... uh, uh, it would be interesting. We might be able to look it up. I can't remember, but I, I bet you it's about 10% different.

   18. DPDaniel Priestley25:45

       Mm-hmm.

   19. SBSteven Bartlett25:45

       Even when you subtract out-of-pocket healthcare costs and insurance premiums, the average American worker still takes home significantly more money than the average UK worker.

   20. NHNick Hanauer25:53

       Yeah.

   21. SBSteven Bartlett25:53

       The average US salary is around $74,000. The average UK salary is around roughly $50,000. Americans pay heavily for healthcare. The average employee in America pays about 6 to $8,000 a year in premiums and out-of-pocket costs. Brits do not pay b- for healthcare-

   22. NHNick Hanauer26:08

       Yeah

   23. SBSteven Bartlett26:08

       ... because of the NHS. If a US worker makes $74,000 and spends 8K on healthcare-

   24. NHNick Hanauer26:13

       Yeah

   25. SBSteven Bartlett26:13

       ... they are, they are at $66,000 before relatively low taxes. The UK worker starts at 52,000 before relatively high taxes. The bottom line is the gap in base salaries and tax rates is simply too large for UK free healthcare to close. The US wins on pure disposable income per person.

   26. NHNick Hanauer26:33

       Yeah. Uh, there, there's no doubt the US has had a much more successful economy-

   27. SBSteven Bartlett26:37

       Yeah

   28. NHNick Hanauer26:37

       ... than the UK, Brexit being, you know, a catastrophe.

   29. DPDaniel Priestley26:40

       Can, can I push back on one thing, though, with the minimum wage or, or the, this-

   30. NHNick Hanauer26:44

       Yeah
9. 26:57 – 28:38

   Do Higher Wages Hurt Small Business?

   1. DPDaniel Priestley26:57

      that I feel, and this is what I'm concerned about-

   2. NHNick Hanauer26:59

      Mm-hmm

   3. DPDaniel Priestley26:59

      ... is that in the UK, the majority of businesses that do pay minimum wage... Like, a friend of mine owns a pub, and that pub has razor-thin margins. It's losing money.

   4. NHNick Hanauer27:08

      Yeah.

   5. DPDaniel Priestley27:09

      He's not taking any money out of it.

   6. NHNick Hanauer27:10

      Yeah.

   7. DPDaniel Priestley27:10

      He's massively impacted by taxes and minimum wage.

   8. NHNick Hanauer27:13

      Yeah.

   9. DPDaniel Priestley27:13

      So the companies that I see that are the ones who have to pay minimum wage workers and give people the on-ramp into the economy, pubs, little retailers-

   10. NHNick Hanauer27:22

       Yes

   11. DPDaniel Priestley27:23

       ... mom-and-dad businesses, these are the ones that really do get squeezed out of the economy. They have razor-thin margins, and you put more pressure on them. You say, "You've got more government regulations. You got more taxes, and now you've got more minimum wages," and they just go, "I've had enough. I can't do it." And the companies that hollowed out the middle class, the Microsofts, the Googles, the, you know, Amazons, they go-

   12. NHNick Hanauer27:44

       Starbucks.

   13. DPDaniel Priestley27:45

       Yeah, the Starbucks. They go, "Yeah, we can ab- we can absorb it."

   14. NHNick Hanauer27:48

       Yes.

   15. DPDaniel Priestley27:48

       Um, and also, we're not paying tax anyway, so we'll just kinda, like, do that.

   16. NHNick Hanauer27:52

       So one of the things that you could do, one of the things that we recommend, is that you impose these standards progressively, that the biggest companies-

   17. DPDaniel Priestley27:58

       I love it

   18. NHNick Hanauer27:58

       ... have to pay the highest minimum wage.

   19. DPDaniel Priestley28:00

       Yeah.

   20. NHNick Hanauer28:00

       Medium-sized companies pay slightly less, and small businesses pay less.

   21. DPDaniel Priestley28:03

       Yeah.

   22. NHNick Hanauer28:04

       But even within that context, ensuring that everyone pays enough for people to have enough money to continue to buy stuff-

   23. DPDaniel Priestley28:12

       Hmm

   24. NHNick Hanauer28:12

       ... I mean, it's fine and good to say, "Look, I don't wanna pay high wages in my pub," uh, but surely the people working in the pub should make enough money so that they can go to the pub themselves and buy a beer, right? You have to... I mean, it, you know, the National Restaurant Association in America is the, you know, famous for this. Like, they want everybody in America to be able to go to a restaurant and eat, except for the people who work in the restaurants [laughs] right?

   25. DPDaniel Priestley28:37

       Yeah.

10. 28:38 – 33:02

    Why Small Businesses Can't Match MegaCorp Pay

    1. SBSteven Bartlett28:38

       Can I just say something with your friend that owns the pub as well?

    2. NHNick Hanauer28:40

       Yeah.

    3. DPDaniel Priestley28:40

       Yeah.

    4. SBSteven Bartlett28:40

       So say you own Starbucks.

    5. NHNick Hanauer28:42

       Yeah.

    6. SBSteven Bartlett28:42

       You own a pub.

    7. DPDaniel Priestley28:43

       Yeah.

    8. SBSteven Bartlett28:44

       I'm a worker.

    9. DPDaniel Priestley28:46

       Yeah.

    10. SBSteven Bartlett28:47

        If you're gonna pay me more a- because you have this progressive minimum wage and you're gonna pay less, I'm sorry, Daniel, I'm not gonna apply for the job. I'm gonna wanna go work at Starbucks. So is there not an issue where you're not gonna be able to attract talent because you're not gonna be able to pay them as much?

    11. DPDaniel Priestley29:03

        There, there are ma-

    12. SBSteven Bartlett29:04

        Still, just wanna say

    13. DPDaniel Priestley29:04

        ... there are many reasons why you would work for a-

    14. SBSteven Bartlett29:06

        Yeah

    15. DPDaniel Priestley29:06

        ... small business as opposed to a MegaCorp.

    16. SBSteven Bartlett29:08

        But I'm saying you're paying me £4 minimum wage. He's paying me 8.

    17. DPDaniel Priestley29:11

        So if I were to-

    18. SBSteven Bartlett29:12

        Do, why not... Does, does he not end up getting all the, the best talent?

    19. DPDaniel Priestley29:15

        He might get the best talent, and also for my pub, I might be able to have to... I might ma- match 8, right? So maybe it works that I just pay it.

    20. SBSteven Bartlett29:22

        And then we're back in the same-

    21. DPDaniel Priestley29:23

        I pay it, but I'm not necessarily legislated to pay it.

    22. SBSteven Bartlett29:26

        Yeah.

    23. DPDaniel Priestley29:26

        So here's the thing-

    24. NHNick Hanauer29:27

        It's more fu- uh, uh, look, as a small business owner, you can treat p- there's all sorts of techniques that you can use to retain people.

    25. DPDaniel Priestley29:33

        Could, could-

    26. SBSteven Bartlett29:33

        And you're gonna have more optionality.

    27. NHNick Hanauer29:35

        A- as a big company?

    28. SBSteven Bartlett29:36

        Yeah, because you can, you are gonna be, definitely pay me more.

    29. NHNick Hanauer29:39

        Well, being bigger is always better. It is absolutely true that that high standard will put pressure th- on th- throughout the economy.

    30. SBSteven Bartlett29:46

        Mm-hmm.
11. 33:02 – 35:59

    What Workers Need Right Now

    1. DPDaniel Priestley33:02

       own anything, and if they don't own anything-

    2. SBSteven Bartlett33:03

       Is that the reason in your view?

    3. NHNick Hanauer33:04

       Uh, no. It would be wonderful if everybody owned something. Um, but i- but ownership starts with earning enough money so that you can save money, so that you can begin to own something, right? Like, one of the lessons that we learned was that trying to give stock options to everyone in a company often doesn't work.

    4. DPDaniel Priestley33:25

       Yeah, I agree.

    5. NHNick Hanauer33:25

       Um, it's a catastrophe-

    6. DPDaniel Priestley33:26

       Yeah

    7. NHNick Hanauer33:27

       ... because for 90% of the workers in a company, th- their concerns are immediate, and they don't value-

    8. DPDaniel Priestley33:35

       They don't value the stock options

    9. NHNick Hanauer33:37

       ... the stock options.

    10. DPDaniel Priestley33:37

        And if you give them the choice between cash or stock options, they choose cash.

    11. NHNick Hanauer33:39

        It, it's not even close.

    12. DPDaniel Priestley33:40

        Yeah, they want cash.

    13. NHNick Hanauer33:40

        Right? And so, a- again, I agree with the sentiment. It's just that I have never seen and I do not believe there is an existence proof for it working on planet Earth. What certainly worked great in the United States for 40 or 50 years was a set of standards that required companies to fairly split the value they create with their employees, uh, through a variety of mechanisms, unions-

    14. DPDaniel Priestley34:08

        Mm-hmm

    15. NHNick Hanauer34:08

        ... which can be problematic, for sure, but labor standards, like the minimum wage and the overtime threshold and so on and so forth, coupled with a set of policies to discourage consolidation-

    16. DPDaniel Priestley34:21

        Mm

    17. NHNick Hanauer34:21

        ... and discourage the kind of exploitation that you have, I think, v- very smartly articulated, um, so that we can have a dynamic economy.

    18. DPDaniel Priestley34:31

        The only difference that happened back-

    19. NHNick Hanauer34:33

        Yeah

    20. DPDaniel Priestley34:33

        ... in the s- in the time that you're describing where workers had to be included is that it was nearly impossible for a company to outsource their customer success team to the Philippines, and it was nearly impossible for a company to come up with a piece of software that would do 80% of the heavy lifting of a job. And one of the issues that we have right now is that when you put a lot of pressure on, on a, all sorts of companies, we're living in the age of AI and robotics, where you essentially, you know, one of the options that companies have is just the option, "Well, we'll just outsource the labor to another country. We'll automate it. We'll simplify it."

    21. NHNick Hanauer35:09

        Okay, but those, the, the rules that enabled people to do that were written by the same people who-

    22. DPDaniel Priestley35:16

        Mm

    23. NHNick Hanauer35:16

        ... are consolidating industries and-

    24. DPDaniel Priestley35:18

        Mm-hmm

    25. NHNick Hanauer35:18

        ... [laughs] and taking advantage. I mean, y- you don't have to live in a world like that. There are other ways to organize the world.

    26. DPDaniel Priestley35:26

        Mm.

    27. NHNick Hanauer35:27

        The neoliberals promised that free trade was gonna make all of us richer, and what it did is it flooded our markets with cheap stuff from China, but it is absolutely not clear that it made people's lives better. The things-

    28. DPDaniel Priestley35:40

        Made Chinese people's lives-

    29. NHNick Hanauer35:41

        It made-

    30. DPDaniel Priestley35:42

        Uh, lifted
12. 35:59 – 40:28

    Ownership Models That Build Wealth

    1. NHNick Hanauer35:59

       we would've rethought it.

    2. DPDaniel Priestley36:00

       There's a few ownership models that I think are important that could be looked at. Number one is a sovereign wealth fund. So the countries like Norway, uh, Singapore-

    3. NHNick Hanauer36:08

       Yeah

    4. DPDaniel Priestley36:09

       ... these countries, they own natural assets, uh, in a sovereign wealth fund, and essentially, every citizen therefore-

    5. NHNick Hanauer36:16

       Yes

    6. DPDaniel Priestley36:16

       ... owns a piece of some asset. There is an asset that is owned through a sovereign wealth fund. It's a very successful model. It seems to work so incredibly well that it's dangerously well. Um, half of London is now owned by the Qatari self-

    7. NHNick Hanauer36:28

       Yes

    8. DPDaniel Priestley36:28

       ... Sovereign Wealth Fund, the Norwegian Sovereign Wealth Fund. We're literally losing all of our property to the sovereign wealth funds of the world. So the sovereign wealth fund model is incredibly powerful.

    9. NHNick Hanauer36:37

       Yes.

    10. DPDaniel Priestley36:37

        Um-

    11. SBSteven Bartlett36:38

        So just for someone that doesn't know what that is, youYou have natural assets within the company owned-

    12. DPDaniel Priestley36:43

        Yeah

    13. SBSteven Bartlett36:43

        ... owned in part by the state.

    14. DPDaniel Priestley36:45

        So the UK did a stupid thing. We discovered the North Sea back in the '80s, I think it was, and Norway had half and we had half of this Norwegian, uh, this North Sea oil, and the Norwegians said, "Hey, we'll just own this in a fund that all of our citizens will benefit from, and that will be a state-owned fund, and then we'll take the profits of that. We'll reinvest it into assets, and every citizen will benefit from those assets." And the UK said, "We'll just sell a license to British Petroleum."

    15. SBSteven Bartlett37:12

        Yes.

    16. DPDaniel Priestley37:13

        Right?

    17. SBSteven Bartlett37:13

        We'll make the rich people richer.

    18. DPDaniel Priestley37:14

        Well, yeah. And I- Australia is so stupid. We have all this incredible natural resource, no sovereign wealth fund. Uh, Britain, when we took over the whole world, or 25% of the world, we operated sovereign wealth funds called the East India Trading Company and all this sort of stuff, and basically, our business model was sovereign wealth funds for many, many years.

    19. SBSteven Bartlett37:32

        So sovereign wealth fund's number one.

    20. DPDaniel Priestley37:34

        So that would be one. The other one is to put shares into babies' names. So when a baby's born, uh, you have a piece of the stock market, like $1,000 worth of shares, uh-

    21. SBSteven Bartlett37:42

        It's that baby bond-

    22. DPDaniel Priestley37:43

        Yeah

    23. SBSteven Bartlett37:43

        ... idea.

    24. DPDaniel Priestley37:44

        And, and, and it-

    25. SBSteven Bartlett37:44

        Trump's doing both of these things, isn't he? Sovereign wealth fund and the baby bond. He's calling it the Trump Fund or something.

    26. NHNick Hanauer37:49

        Yeah. Well, they're, they're experimenting with some version of this right now.

    27. SBSteven Bartlett37:53

        Mm-hmm.

    28. NHNick Hanauer37:53

        Yeah.

    29. DPDaniel Priestley37:53

        Yeah, so if, if an, a baby, by the time they hit 18, has had 18 years of compounding of owning that asset, then by the time they hi- hit 18, they're literally getting an asset that they can then turn into another asset if they want to. Um, that's pretty powerful. And then the, the biggest issue is the financialization of houses. So if you take a value of a house, about half the value of the house is what you might call the utility value of the house, which is it's a house to live in and I wanna live in it.

    30. SBSteven Bartlett38:22

        Mm.
13. 40:28 – 41:30

    The Real Impact Of Worker Rights

    1. SBSteven Bartlett40:28

       you so much. I want to go back to the central point we were talking about-

    2. NHNick Hanauer40:30

       Yeah

    3. SBSteven Bartlett40:30

       ... which is, like, how do you s- how do you solve this? Because you've got two different views on how you solve this inequality. What I find interesting is the UK has better worker rights.

    4. NHNick Hanauer40:40

       Yeah.

    5. SBSteven Bartlett40:40

       But it is-

    6. NHNick Hanauer40:41

       But you also have much less inequality here. I mean, just to be clear. [laughs]

    7. SBSteven Bartlett40:44

       That is true. So the US is significantly more unequal.

    8. NHNick Hanauer40:47

       Yeah.

    9. SBSteven Bartlett40:48

       The US top 1% holds over 30% of the nation's wealth, compared to roughly 20% in the UK.

    10. NHNick Hanauer40:54

        Yes.

    11. SBSteven Bartlett40:54

        Um, and the US consistently ranks as the most unequal of the G7 nations.

    12. NHNick Hanauer40:57

        Correct.

    13. SBSteven Bartlett40:58

        However, the US is growing much, much faster. If you look at 2019 to 2026, the US has grown over 100% faster than the UK.

    14. NHNick Hanauer41:07

        Yes.

    15. SBSteven Bartlett41:07

        Um, and the UK is vastly more protective of workers. We have the things Daniel said, like paid vacation, paid maternity leave. The UK mandates up to 39 weeks of statutory pay.

    16. NHNick Hanauer41:17

        Yes.

    17. SBSteven Bartlett41:17

        The US mandates zero-

    18. NHNick Hanauer41:18

        Correct

    19. SBSteven Bartlett41:19

        ... which is unbelievably-

    20. NHNick Hanauer41:20

        Correct

    21. SBSteven Bartlett41:20

        ... horrific.

    22. NHNick Hanauer41:21

        But, I mean, one of the things that's happened in the UK, Steve, is, is Brexit. W- when did that happen? 2016.

    23. DPDaniel Priestley41:27

        Yeah, but it's the same-

    24. NHNick Hanauer41:27

        And that's taken, that's taken... What has that taken?

14. 41:30 – 45:01

    What Brexit Really Changed

    1. NHNick Hanauer41:30

       8 or 10% out of UK growth rates. It has affected, uh, unemployment by 4%, productivity gains by 4%. I mean, the list goes on. So that own... I mean, part of, part of why people in the UK are feeling down-

    2. DPDaniel Priestley41:45

       Mm

    3. NHNick Hanauer41:45

       ... is this unbelievable mistake that the country made.

    4. DPDaniel Priestley41:50

       But it's the same in Germany. It's the same in Australia. Germany has unbelievable workers' rights. Australia, unbelievable workers' rights. In fact, the USA is the outlier of all the modern capitalist economies. It-

    5. NHNick Hanauer42:01

       Absolutely, but we're confusing things.

    6. DPDaniel Priestley42:03

       Mm.

    7. NHNick Hanauer42:03

       People are pissed off everywhere in the world.

    8. DPDaniel Priestley42:05

       Everywhere, yeah. That's what I mean.

    9. NHNick Hanauer42:07

       Everywhere in the world.

    10. DPDaniel Priestley42:08

        I don't want... I want the pitchforks to go away as well.

    11. NHNick Hanauer42:10

        Yeah.

    12. DPDaniel Priestley42:10

        But, uh, these workers' rights are not putting the pitchforks away. Like, all of this stuff, the... We've given this stuff to Australia, New Zealand, Canada, uh, all of Western Europe, all the English-speaking democracies, other than the USA. USA is the only one that has virtually no safety nets and no safeguards.

    13. NHNick Hanauer42:29

        Correct.

    14. DPDaniel Priestley42:29

        Everywhere else has healthcare systems that are much more generous and welfare systems that are more generous-

    15. NHNick Hanauer42:34

        Yeah

    16. DPDaniel Priestley42:34

        ... and, w- like, maternity leave. I mean, it's just inhumane that USA doesn't have maternity leave.

    17. NHNick Hanauer42:38

        Yeah.

    18. DPDaniel Priestley42:38

        So all of that stuff, but we've got all of that, but we've got the pitchforks here, too.

    19. NHNick Hanauer42:42

        Yes.

    20. DPDaniel Priestley42:42

        Um, and this is why I'm saying I'm really zoning in on the idea that people need to own a house, they need to own a business, and they need to own shares, and it's like if they own stuff-

    21. NHNick Hanauer42:50

        I could not agree more, and I don't know how to get them there unless they are paid well enough to d-

    22. DPDaniel Priestley42:56

        To do it

    23. NHNick Hanauer42:56

        ... to make, to do that.

    24. DPDaniel Priestley42:57

        Yeah.

    25. NHNick Hanauer42:57

        Let me tell you an anecdote. Yeah, uh, uh, during the George Floyd ri- riotsPeople were burning stuff down in the United States, and there was this fantastic interview with this woman, and the reporter said, "You know, I just, I cannot believe that you don't have respect for property rights." And the woman said-

    26. DPDaniel Priestley43:14

        They've got no property

    27. NHNick Hanauer43:15

        ... "We have no property."

    28. DPDaniel Priestley43:16

        Yeah.

    29. NHNick Hanauer43:17

        You know, w- why should I respect property rights?

    30. DPDaniel Priestley43:19

        That's it.
15. 45:01 – 47:28

    The Hidden Lessons Of K-Shaped Economies

    1. DPDaniel Priestley45:01

       Can I take us briefly back in time? This is not the first time this has happened. The K-shaped economy has happened in the Engels Pause.

    2. NHNick Hanauer45:09

       Yeah.

    3. DPDaniel Priestley45:09

       So the, the-

    4. NHNick Hanauer45:10

       What do you mean by K-shaped economy?

    5. DPDaniel Priestley45:12

       So the K-shaped economy is where... So a normal economy is one where everyone agrees it's going up or down or sideways. Everyone can sort of say, "Oh yeah, roughly speaking, it's a good economy, it's a bad economy. It's, it's rising and falling like a tide." A K-shaped economy is where it's really good for some and really bad for others. It's a disrupted economy. Yeah, right? So the top percentage are going up and the bottom percentage are going down. Now, the headlines that we run today are the exact same headlines that were run in the early 1800s in Britain, and it was essentially record profits for industrialists-

    6. NHNick Hanauer45:43

       Mm-hmm

    7. DPDaniel Priestley45:43

       ... and workers haven't had any-

    8. NHNick Hanauer45:45

       Yes

    9. DPDaniel Priestley45:45

       ... improvements. They al- Like, you could almost take every grievance that we have today, and you could just overlay it in the early 1800s, and you get the exact same-

    10. NHNick Hanauer45:54

        Yeah

    11. DPDaniel Priestley45:54

        ... words. Um, the solutions. Uh, one of the big solutions in the early 1800s was we need to export people. We need to get rid of people.

    12. NHNick Hanauer46:01

        [laughs]

    13. DPDaniel Priestley46:01

        And what they did is they sent everyone to Australia.

    14. NHNick Hanauer46:04

        [laughs]

    15. DPDaniel Priestley46:04

        So they sent, they sent, they sent- They picked up people, and they put them in, in Australia, right? So they, same sort of thing, mass, mass emigration or whatever you call it, re-migration. So they got rid of people out of the country. So it was very similar, and we call this the Engels Pause, but we understand what caused it.

    16. NHNick Hanauer46:19

        The 1790 to 1840.

    17. DPDaniel Priestley46:20

        Yeah. So what caused it was technology, and it was this new-

    18. NHNick Hanauer46:24

        It was the Industrial Revolution.

    19. DPDaniel Priestley46:25

        Yeah.

    20. NHNick Hanauer46:25

        Yeah.

    21. DPDaniel Priestley46:26

        So it was the new technology where we introduced a, a steam engine, we introduced a spinning loom, we introduced, uh, tractors, we introduced all of this sort of new technology. And the owners of that new technology and the people associated with that new technology went like that. They leveled up because of tech, and the people who were not part of that technology went down. Very simple picture you might want to have in your mind is a farm that had 100 workers farming versus one farm that had a tractor. The tractor farm went like that, and they, all the workers went like that. It's because of technology.

    22. NHNick Hanauer46:58

        The interesting thing about the Engels Pause is that for approximately two generations, 50, 75 years, with the exception of the owners of capital, basically everybody else on planet Earth went backwards.

    23. DPDaniel Priestley47:12

        It was hell.

    24. NHNick Hanauer47:12

        It was hell.

    25. DPDaniel Priestley47:14

        Charles Dickens.

    26. NHNick Hanauer47:14

        Um, and what, and what happened is that over time, the political consensus changed, and working people clawed back some of that value through unions, through labor standards, so

16. 47:28 – 51:58

    Will Companies Leave If Taxes Rise?

    1. NHNick Hanauer47:28

       on and so forth.

    2. SBSteven Bartlett47:29

       So one of... I, I guess the essence of what I want to get to is, I mean, something you've always talked about, Dan, as well, is that if you start a- applying pressures on these companies or entrepreneurs, they can just now get up and leave.

    3. NHNick Hanauer47:38

       Mm-hmm.

    4. SBSteven Bartlett47:38

       And that was quite different from that era where we weren't dealing with technological businesses, we weren't dealing with IP and those things. So if you start imposing some of these measures, will these companies get up and leave and go somewhere else where market conditions are preferable? A lot of UK entrepreneurs are, a- as we've seen from some of the numbers recently, choosing to go work elsewhere.

    5. NHNick Hanauer47:56

       Okay, yeah, I think one of the things that just needs to be acknowledged and put on the table is one of the challenges you have here is you have the Eu- Europe or the world has built this incredibly stupid system where you can operate a business here, take advantage of the UK's market, take a- advantage of the UK's rule of law, take advantage of the UK's, uh, infrastructure-

    6. SBSteven Bartlett48:19

       Mm-hmm

    7. NHNick Hanauer48:19

       ... put your stuff in a box, move to Dubai, and pay no tax, right? It's idiotic. It's just, it- it's just idiotic and suboptimizing. As an American, I pay tax wherever I go, right? So I cannot come to a place and take advantage of it-

    8. SBSteven Bartlett48:35

       Mm

    9. NHNick Hanauer48:35

       ... and then skirt the laws. So this is such a profound disincentive to do the right thing.

    10. DPDaniel Priestley48:44

        Well, yeah, yes. But the real culprit is what companies can do because US companies can do it. You, you can't do it as an individual, but you can set up an office in Ireland-

    11. NHNick Hanauer48:54

        Yes

    12. DPDaniel Priestley48:54

        ... in Luxembourg.

    13. NHNick Hanauer48:55

        Which is even worse.

    14. DPDaniel Priestley48:56

        And, and it's the corporations that are the bad guys. These-

    15. NHNick Hanauer48:58

        Which is... But you have both problems bec- You, you have, you have UK-based entrepreneurs who are like, "Well, I can stay here and pay 40% tax," or whatever it is, right? Just pop off to Dubai, run the business virtually, and pay nothing.

    16. SBSteven Bartlett49:11

        So what are you saying should be done with those people that do that?

    17. NHNick Hanauer49:13

        I think that U- U- UK citizens should pay U- UK tax wherever they go, and German citizens should pay German tax wherever they go.

    18. SBSteven Bartlett49:21

        Do you agree?

    19. DPDaniel Priestley49:22

        I don't think that will solve it because it's not citizens, it's corporations that are the bad guys. It's-

    20. NHNick Hanauer49:26

        Well, it will solve one problem.

    21. DPDaniel Priestley49:27

        Yeah.

    22. NHNick Hanauer49:28

        It will not s- th- this other problem needs to be handled too.

    23. DPDaniel Priestley49:30

        Yeah. The, the, the giant vampire squids of the world are companies that are pumping money out of the economies, and they're faceless corporations that have figured out how to play this game. So for example, y- let's take YouTube, for example. YouTube is serving up a ton of videos to people all over this country, and they're running ads, but that is pretending to be in some distant place. It's not pretend- it's not being in the UK. And what we used to do in the UK is we used to have a broadcast license. If you want to broadcast in the country, you pay a flat fee and you can broadcast. Why is YouTube not playing a, paying a broadcast license? If they are bro- a broadcaster effectively, uh, and running ads, they sit there and say, "Oh, but there's this, and we shift our profit through here. And, oh, we have to... I'm so sorry, but we have to buy our licensing, you know, from this company over in this other Vanuatu or whatever." It's like, no, no, no, we don't care about that. It's like, look at how many-

    24. NHNick Hanauer50:22

        But you do business in the UK.

    25. DPDaniel Priestley50:23

        Yeah.

    26. NHNick Hanauer50:23

        You should pay tax in the UK.

    27. DPDaniel Priestley50:24

        So it's just as simple as y-

    28. NHNick Hanauer50:26

        Yeah

    29. DPDaniel Priestley50:26

        ... you- you've got this many views and the broadcast license for you is this much.

    30. SBSteven Bartlett50:30

        Okay, so do you agree on both points then, that you should tax corporations based on where their customers are consuming, and you should tax individuals irrespective of where they decide to fly off to?
17. 51:58 – 54:00

    Should Global Corporations Pay More Tax?

    1. SBSteven Bartlett51:58

       S- s-

    2. DPDaniel Priestley51:58

       ... out of economies.

    3. SBSteven Bartlett51:58

       If we take a mega corporation, you know, think of one in your head-

    4. DPDaniel Priestley52:02

       Mm-hmm

    5. SBSteven Bartlett52:02

       ... and we decide to tax them where their customers are.

    6. DPDaniel Priestley52:05

       Yeah.

    7. SBSteven Bartlett52:06

       I was looking at some of the research and it says corporations rarely just absorb the tax. When countries like the UK or France introduce taxes based on local users-

    8. DPDaniel Priestley52:13

       Of course they don't

    9. SBSteven Bartlett52:13

       ... tech giants like the u- like the biggest in the world immediately raised fees and prices for the consumer and small businesses inside those specific countries to offset the cost.

    10. NHNick Hanauer52:21

        If we had a global tax system that prevented this, then they wouldn't do it because they couldn't do it.

    11. SBSteven Bartlett52:26

        If the compliance cost of tracking user locations and paying to local taxes outweighs the profit from the region, companies also tend to simply block users in those countries or pull their products entirely.

    12. NHNick Hanauer52:34

        Great. Great. And that opens up a possibility of a local company to do it.

    13. SBSteven Bartlett52:39

        Worse.

    14. NHNick Hanauer52:40

        Huh?

    15. SBSteven Bartlett52:41

        Worse.

    16. NHNick Hanauer52:42

        M- maybe better.

    17. SBSteven Bartlett52:43

        I was thinking here about the large language models, and I was thinking about that as an example. If, you know, if, if the UK tried to take on Gemini or ChatGPT, et cetera, w- we would be using a significantly worse technology than-

    18. DPDaniel Priestley52:56

        The, the truth is that those l-

    19. SBSteven Bartlett52:57

        ... those m- those mega corps. That's accurate, no?

    20. DPDaniel Priestley52:59

        Those mega corps, they don't do this.

    21. NHNick Hanauer53:01

        Maybe.

    22. DPDaniel Priestley53:01

        They, they want to own the world and they want to dominate the world. They- they're not interested in cutting countries out, right? None of them actually cut countries out.

    23. NHNick Hanauer53:08

        When you think, you think Facebook is just gonna leave the UK?

    24. DPDaniel Priestley53:11

        Yeah.

    25. NHNick Hanauer53:11

        No.

    26. DPDaniel Priestley53:11

        Like, they're, they're not gonna do that. They, they... So, and the other way is how you do it. So if you simply charge-

    27. SBSteven Bartlett53:16

        Didn't they do that in Australia, though, with the news publishing business?

    28. DPDaniel Priestley53:19

        They, they might do it very briefly as a way to punish political, uh, dissent, but ultimately they operate globally. They have a global business model and they, uh, es- essentially too, we just need to say, "I'm sorry, you've had your 20, 30 years of not paying taxes anywhere, but we're not doing that anymore." And, you know, we, we are very good at coordinating when we want to coordinate, and we need to say the bad guy here... I mean, it is really just pulling money out of our economies and taking it-

    29. NHNick Hanauer53:47

        Yes

    30. DPDaniel Priestley53:47

        ... to other, other places. And one of the reasons that the USA has become so wealthy with its stock market is because it is the end valuation where all of these vampire squids end up with their balance sheet.
18. 54:00 – 54:58

    How MegaCorps Block Entire Markets

    1. SBSteven Bartlett54:00

       look at what happened, it was, um, Australia I was thinking about, um, but it also happened in Canada where they passed a law called the Online News Act requiring tech giants to pay local publishers whenever Canadian users shared or viewed news links. And immediately, instead of paying, uh, the user location tax, Meta simply blocked all news content from every user in Canada because the cost of compliance just wasn't worth the hassle for one particular market. And you have the same thing happen with Amazon, where several US states like California tried to force Amazon to collect local sales tax simply because Amazon had independent affiliates like bloggers, et cetera-

    2. DPDaniel Priestley54:32

       Mm-hmm

    3. SBSteven Bartlett54:32

       ... um, living in those states. And rather than dealing with the complex local tax collection, Amazon instantly terminated thousands of affiliate accounts.

    4. DPDaniel Priestley54:38

       Yeah.

    5. NHNick Hanauer54:38

       If every state required Amazon to collect local sales tax, then obviously they couldn't do any of that. They would have to deal with it, right? It, it's just, uh, uh, uh, these big corporations have a massive advantage over the jurisdictions that they're operating in because they have so much more power and so much more flexibility.

    6. SBSteven Bartlett54:57

       So

19. 54:58 – 56:51

    Solutions To Economic Inequality

    1. SBSteven Bartlett54:58

       what is the, what is your solution then, Daniel, to solve for this inequality problem that we're experiencing? Because, you know, you seem to be less interested in the sort of workers' rights piece because that seems to-

    2. DPDaniel Priestley55:09

       We've tried it

    3. SBSteven Bartlett55:10

       We tri- You're saying we tried it?

    4. DPDaniel Priestley55:12

       Yeah. What I would like personally is I wanna see way more small businesses, and I want the government to favor small businesses and essentially say, "We're going to reduce the taxes and the pressure on the small businesses. We're gonna advantage local small businesses that are here and paying tax. Um, we're gonna create special economic trading zones if your business is based here, uh, and is a smaller size. We're going to basically make ourselves highly competitive for small businesses to show up and do their A game."

    5. SBSteven Bartlett55:38

       And what about big businesses?

    6. DPDaniel Priestley55:39

       Punish, punish big businesses that, that are-

    7. NHNick Hanauer55:42

       I wouldn't punish them.

    8. DPDaniel Priestley55:43

       Well-

    9. NHNick Hanauer55:43

       I would just tilt the play-- I'm 100%-

    10. DPDaniel Priestley55:46

        Yeah

    11. NHNick Hanauer55:46

        ... with him. Tilt the playing field towards smaller businesses and startups. Uh, you know, I, I'm not sure if you've heard about this thing that, uh, I just joined the board of called Enterprise Britain that, uh-

    12. DPDaniel Priestley55:57

        Oh, cool

    13. NHNick Hanauer55:57

        ... that, um, Brent Hoberman, who does Founders Forum-

    14. DPDaniel Priestley56:01

        Hmm. Yep

    15. NHNick Hanauer56:01

        ... and Steve Fitzpatrick, who founded OVO-

    16. DPDaniel Priestley56:03

        Mm-hmm

    17. NHNick Hanauer56:03

        ... just started. It's called Enterprise Britain. It's a group of us who have gotten together, uh, with the express purpose of doing exactly pretty much what you, what you described, which is to try to make Britain an even better environment for business, mostly small and medium-sized businesses. And one of the great challenges here is to fi- try to find capital structures that allow small companies to turn into larger companies while remaining here and not fleeing to a better place. But I'm, I am 100%-

    18. DPDaniel Priestley56:33

        Hmm

    19. NHNick Hanauer56:33

        ... in agreement with this, and you can have an incredibly dynamic, fast-growing economy where all of the benefits flow to the people at the very top and everybody else gets screwed. [laughs]

    20. DPDaniel Priestley56:47

        Mm-hmm.

    21. NHNick Hanauer56:48

        And you have to do both.

    22. DPDaniel Priestley56:49

        Mm.

    23. NHNick Hanauer56:50

        You have to do both.

20. 56:51 – 58:59

    Ads

    1. SBSteven Bartlett56:51

       [page flips] I've spent the last decade building and investing in companies, and so often the conversation around marketing budgets follows the exact same pattern. The budget gets approved, but then the results don't come back, and most of the time, the creative pitch and the offer is fine. The problem lies with the audience. Ads reach people who will never buy or refer, nor do they have the power to sign off anything at all, and this is why so much budget gets wasted. LinkedIn Ads, who are a sponsor of this podcast, lets you reach them specifically by job title, seniority, company size, industry, the skills that they have, and much more. You're no longer hoping your ad reaches the right person. Instead, you're defining exactly who sees it, and LinkedIn Ads drives the highest B2B return on ad spend across all major ad networks. Give them a try at linkedin.com/diary. And if you spend $250 on your first campaign, you'll get a $250 credit for your next one just by going to linkedin.com/diary. Keep this to yourself. Terms and conditions apply. [page flips] For every founder, there comes a point in building a company where your job shifts from being the person inside your business actioning everything to the person responsible for absolutely everything. The only way I've been able to make this shift across the different companies and teams I'm responsible for is by knowing that the right systems are in place to manage everything, systems that don't need me in order for them to work. Our sponsor, Pipedrive, is one of those systems, an easy-to-use intelligent CRM tool for growing sales teams. My teams use it and have for the last decade because it's genuinely the most effective way to run a sales operation. Through one dashboard, you get every deal visible, and every stage of the sales process is clear, and what needs to happen next is all there in real time. When a system like this works, you don't need to be in every conversation to know exactly if your business is moving forward, where, and what the blockers are. Over 100,000 companies are already running their sales on it, so if you'd like to join them, sign up at pipedrive.com/ceo, where you'll get an exclusive 30-day free trial instead of the usual 14 days. No credit card is needed. That's pipedrive.com/ceo.

21. 58:59 – 1:01:38

    How Many Jobs Will AI Replace?

    1. SBSteven Bartlett59:00

       [page flips] I mean, one of the most important subjects at the moment in society is artificial intelligence, and we-- You probably saw recently Eric Schmidt did a commencement speech in front of thousands of students, and every time he said the word-

    2. DPDaniel Priestley59:10

       He got booed off stage, yeah

    3. SBSteven Bartlett59:11

       ... every time he said the word AI. Um, one of the things that Anthropic, or one of the leading AI companies, said recently is that entry-level jobs are at risk, and I've got this graph here showing the decline of entry-level job postings. I believe it was on LinkedIn, um, pulled from somewhere, and it shows that they're consistently dropping and dropping and dropping. AI is-- I think about it so often. I, I was up late last night trying to think through some of this stuff because Anthropic released a report yesterday showing that the AI models will be able to improve themselves theoretically in the future, and what this might mean. How disruptive do you think AI is gonna be as it relates to job losses?

    4. NHNick Hanauer59:48

       You know, I don't think Bernie Sanders' latest idea is terrible.

    5. SBSteven Bartlett59:51

       US will own 50% of all the AI companies.

    6. NHNick Hanauer59:53

       Yeah. It is absolutely true that AI has monetizing for free humanity's intellectual property, and a few people are gonna directly benefit from that. And I think that, um, in the same way that Norway created a sovereign wealth fund with this enormous asset that they had-

    7. SBSteven Bartlett1:00:12

       Mm-hmm

    8. NHNick Hanauer1:00:12

       ... uh, creating a sovereign wealth fund with 50% of the value created by AI and recycling that into, uh, I think it's unclear exactly how those benefits should be, should be recycled, but trying to find a way to make some of that value a cushion for the disruption that it will inevitably cause, I don't think that's a crazy idea.

    9. SBSteven Bartlett1:00:33

       It's a good idea for China and the US.

    10. NHNick Hanauer1:00:35

        Yes. Yes.

    11. SBSteven Bartlett1:00:38

        But not for anywhere else necessarily. It's not gonna help Senegal or S-Southampton much.

    12. DPDaniel Priestley1:00:42

        No. In fact, it'll damage a lot of those places. Uh, you know, like the Philippines has benefited enormously by being the outsourced back office, uh, for a lot of small businesses that AI can now do a lot of those, those, uh, those jobs. Um, one of the things that I always come back to is the idea that, say, the UK has 5.7 million businesses. We have a million unemployed people. We need one-fifth of the businesses to employ one person. AI does actually make your business better. Like, AI is really good at helping you with your marketing. AI is great at helping you do legal contracts. There are 100 ways that AI could actually make-

    13. DPDaniel Priestley1:01:19

        5.7 million businesses a little bit better to the point where they wanna hire someone, and if we can incentivize those things to happen, businesses are trained on how to use AI to their advantage, and tax breaks for small businesses that are hiring, and we will, we'll... You know, there, there's actually 5.7 million businesses and a million unemployed people. That's a good m- there's

22. 1:01:38 – 1:05:25

    AI Agents Are Replacing Entry-Level Work

    1. DPDaniel Priestley1:01:38

       a good match there.

    2. SBSteven Bartlett1:01:39

       Uh, you know, um, a lot of people have been talking about AI agents, and, uh, what an AI agent can do, for anyone that doesn't know, is it can go on your computer, and it can get any task you want done on the computer, um, whether that's, you know, editing tasks or whether it's, you know, manual data entry tasks or whatever it is. It can click around on a computer and do things. A lot of the entry-level roles we're often given are that kind of work. I think my entry level, entry-level jorl- job after I dropped, dropped out of university was kind of doing that kind of thing. There was also a little bit of a sales component where I'd cold call people. Um, AI can now do the cold calls, too, and increasingly, if we just play the rate of development forward, we'll be able to do those things. So if these businesses get more and more efficient, um, again, it comes back to this at an entry-level point is what, what role will entry-level team members have in these kind of companies?

    3. DPDaniel Priestley1:02:26

       So what's interesting for me, I have a group of companies, small businesses, uh, dynamic small businesses. We've implemented AI in all of them, and as a result, we've hired people.

    4. SBSteven Bartlett1:02:35

       Who have you hired?

    5. DPDaniel Priestley1:02:36

       So more-

    6. SBSteven Bartlett1:02:36

       Entry-level people?

    7. DPDaniel Priestley1:02:37

       We've hired some entry-level people who are augmented by AI, so they become more valuable because of AI. But, like, things like appointment setting, we've ended up hiring more salespeople because we get more appointments. We, we use it with our marketing, and we end up hiring people who can actually have those final conversations with p- people. At the very core of my organizations, we have an AI layer, and the AI layer has context and skills and models and security layer, right, all, all in there, and it spits out amazing information and data and reports and tells us who to talk to and why to talk to them and what to talk to them about. All these things are happening because of AI.

    8. SBSteven Bartlett1:03:12

       But it doesn't get around the point that, like, if you think about Uber, uh, Dara's been pretty clear that the 9 million drivers they have, I think it is, are gonna lose their jobs in the future. If you think about the, the other sort of white-collar professions we've described, they, they're, those roles won't, won't exist in the future. Well, I should say-

    9. DPDaniel Priestley1:03:28

       And-

    10. SBSteven Bartlett1:03:28

        ... those roles will be, will be, will be changed

    11. DPDaniel Priestley1:03:30

        ... changed. Correct. If I put on my more optimistic hat, it, the thing is, is that all businesses operate in a competitive environment, and there are two ways to compete. [chuckles] One is to be cheaper. The other is to be better, right? And the thing about AI is that, yeah, there are tasks that you can automate away, but one person with good AI tools may be able to do the job of five.

    12. SBSteven Bartlett1:04:02

        Mm.

    13. DPDaniel Priestley1:04:02

        Right? And yeah, you could eliminate that job, or you could keep that person, give them the right tools, and out-compete your competitors.

    14. SBSteven Bartlett1:04:10

        The right tools.

    15. DPDaniel Priestley1:04:11

        The right tools, right?

    16. SBSteven Bartlett1:04:12

        I think there's an assumption that w-

    17. DPDaniel Priestley1:04:14

        I mean, this is, of course, what happened with computers, right? I mean, I'm, I am older than you guys.

    18. SBSteven Bartlett1:04:18

        Mm.

    19. DPDaniel Priestley1:04:18

        So I remem- I remember when calculators hit. You had to be there to realize how freaked out people were about calculators, right? Like, people were talking about, like, "Well, what are the accountants gonna do?" And w- w- and, and, "Will kids learn math anymore?" I mean, it was, it was, like, extremely controversial to bring a calculator to, to, to school. And then a- along came computers, and the truth is that computers didn't reduce the amount of work that people did. They increased the amount of work that people did.

    20. SBSteven Bartlett1:04:52

        Mm.

    21. DPDaniel Priestley1:04:52

        And I do believe that there are ways in which AI is probably gonna do that. And so the job loss may not be as apocalyptic as it now feels like it may be because, again, at the end of the day, you have two ways to choose to compete. If you i- i- you know, you can get rid of somebody and do X, but you could keep that person and have them do five X and out-compete-

    22. SBSteven Bartlett1:05:17

        Mm

    23. DPDaniel Priestley1:05:17

        ... you know, your competitors in another dimension. I think that that will be something that people are likely to do. Doctors are just gonna be better doctors.

23. 1:05:25 – 1:08:39

    Will AI Reduce Hiring?

    1. SBSteven Bartlett1:05:25

       I think I, I definitely agree that there's gonna be this sort of augmentation of certain individuals. I think maybe the difference between, like, calculators or computers versus this is AI is coming into a technological economy, and it is coming in with instant scale in a way that-

    2. DPDaniel Priestley1:05:43

       Yeah

    3. SBSteven Bartlett1:05:43

       ... when, when Anthropic shipped their new model last week, it went to all of us at once-

    4. DPDaniel Priestley1:05:49

       Yeah

    5. SBSteven Bartlett1:05:49

       ... everywhere in the world. We were all, boom, step changed.

    6. DPDaniel Priestley1:05:52

       Yes.

    7. SBSteven Bartlett1:05:52

       With computers, I remember the day that, like, my dad ordered the first computer for our house, and we waited for weeks and weeks and weeks.

    8. DPDaniel Priestley1:05:58

       Yeah.

    9. SBSteven Bartlett1:05:58

       And then we got it. It was super expensive to get one. We unboxed it.

    10. DPDaniel Priestley1:06:01

        Yes.

    11. SBSteven Bartlett1:06:01

        I remember us all stood around it looking at... And it was, like, this Windows 95 machine-

    12. DPDaniel Priestley1:06:05

        Right

    13. SBSteven Bartlett1:06:05

        ... that had, like, no memory on it. Um, so the distribution, the sort of disruption was much slower.

    14. DPDaniel Priestley1:06:09

        Well, the p- the pace is-

    15. SBSteven Bartlett1:06:11

        The pace was much slower

    16. DPDaniel Priestley1:06:11

        ... is much slower. Right.

    17. SBSteven Bartlett1:06:13

        And I understand that, like, with my, with our team, there's no intent. We have no intention at all to let anybody go because of AI. We're re-skilling people, training people. However, would we end up hiring less people, especially in the near term, than we would have otherwise? I think that's maybe conceivable.

    18. DPDaniel Priestley1:06:30

        Yeah.

    19. SBSteven Bartlett1:06:31

        Um, and a lot of companies, I think, are in that position, where I actually was speaking to someone yesterday, and they said, "We're just letting the natural attrition in our call center take care of the shift," which means they, they have-- they lose 25% of people from their call center naturally.

    20. DPDaniel Priestley1:06:46

        Yeah.

    21. SBSteven Bartlett1:06:46

        They're just not hiring other people back in. And actually, Klarna's CEO said the same thing. He said, "We're just letting the attrition take care of it." Um-

    22. DPDaniel Priestley1:06:52

        I'll give you another example, though, just to counter that. Um, I work with a husband and wife couple in the north of England who they had a little video production agency and, like, one or two people who did a little bit of contracting with them. Uh, they used AI to create a piece of software.

    23. DPDaniel Priestley1:07:09

        And that piece of software, uh, helps automate script writing and a few of the things-

    24. SBSteven Bartlett1:07:13

        Yeah

    25. DPDaniel Priestley1:07:14

        ... that they do. Um, they launched a waiting list for this. They got five and a half thousand people to join the waiting list. They then signed up their first 1,500 clients to a piece of software that cost almost nothing for them to build in four months. Um, and now they're hiring a team of 10 people, and th- this is a husband and wife who had a small constrained business who are now, uh, building out a bigger business, and this is something that could never have happened. They haven't had to raise billion- huh- millions of dollars. They haven't had to hire 30, 40 people. So this, this tiny little SaaS opportunity is suddenly possible because of AI, and it... Take, take that AI away, and that fast-growth dynamic little business is, is-

    26. SBSteven Bartlett1:07:55

        Yeah, I think anecdotally I could come up with lots of examples as well where particular people are highly entrepreneurial. They come across an opportunity. But there's this broad... If you just zoom out on the way that people generate value in the economy at the moment, so much of that is gonna change, and it's gonna be quite quick it feels like.

    27. DPDaniel Priestley1:08:09

        Oh, totally.

    28. SBSteven Bartlett1:08:09

        And I don't know what you do about... Like, what do you do about that sudden shift?

    29. DPDaniel Priestley1:08:12

        Well, well, this, this happened in the Jevons Paradox. The person who had a tractor displaced 100 people who were in the field, and those 100 people went into the city looking for work all at once, and it was... Charles Dickens wrote The Tale of Two Cities. He wrote, uh, uh, Oliver Twist. Uh, guess who else came out of the Jevons Paradox? Our good friend Karl Marx, who came up with the most toxic ideas ever created and written down, right? He came off the back of the Jevons Paradox.

24. 1:08:39 – 1:13:29

    Is Universal Basic Income The Answer?

    1. SBSteven Bartlett1:08:39

       So what do you do about it?

    2. DPDaniel Priestley1:08:41

       Uh-

    3. SBSteven Bartlett1:08:41

       UBI?

    4. DPDaniel Priestley1:08:42

       I'm not a big fan of UBI at the moment. Um-

    5. SBSteven Bartlett1:08:44

       Isn't that kind of what this 50% Bernie Sanders thing would do?

    6. NHNick Hanauer1:08:46

       Well, it's, it's sovereign wealth fund basically. But you have to find a way to help manage through this transition, and you have to, I think, depend on the value cre- Look, the, the whole, the, the whole valuation that a- AI is predicated on is job disruption.

    7. SBSteven Bartlett1:09:03

       Yes.

    8. NHNick Hanauer1:09:03

       Right? You can't, you can't get to those numbers unless you're displacing lots of jobs.

    9. SBSteven Bartlett1:09:08

       Exactly.

    10. NHNick Hanauer1:09:08

        A- and, and i- if that's true, then we should grab some of that value that is created and recycle it into the economy to try to cushion the disruption that it creates.

    11. SBSteven Bartlett1:09:20

        This is a bit of a socialist idea, idea, right?

    12. NHNick Hanauer1:09:22

        I don't call that socialism.

    13. SBSteven Bartlett1:09:23

        What do you call that?

    14. NHNick Hanauer1:09:24

        I don't know. Just common sense. [laughs]

    15. SBSteven Bartlett1:09:26

        But wouldn't that broadly apply to all-

    16. NHNick Hanauer1:09:27

        [laughs]

    17. SBSteven Bartlett1:09:27

        ... all companies and rich people if there's... if they are disrupting the economy and taking an unfair share of that disruption? Should we not just grab and recycle back in?

    18. NHNick Hanauer1:09:37

        But that's the b- that is the basis upon which every high-functioning democracy in the co- in, in the world operates. I mean, e- every high-functioning democracy in the world has progressive taxation, labor standards, rule of law-

    19. DPDaniel Priestley1:09:48

        There's a difference between seizing private property, uh, which would be a socialist way of doing things and a communist way of doing things, and owning strategic assets, which i-

    20. SBSteven Bartlett1:10:00

        Which are private property

    21. DPDaniel Priestley1:10:01

        ... So for example, the, the Dubai government owns the, uh, physical hotel buildings that, uh, that run Dubai, and it leases those out to hotel operators, but it k- keeps money in its sovereign wealth fund because it says basically, "A big part of Dubai is that we own these kind of land assets."

    22. SBSteven Bartlett1:10:19

        So do you think we should go and take a, a, a portion of these companies?

    23. DPDaniel Priestley1:10:24

        Well, the difference was the Dubai government actually developed those assets.

    24. SBSteven Bartlett1:10:28

        Right, but we're, we're already too far down the line with- within c- a capitalist society like the United States.

    25. DPDaniel Priestley1:10:31

        So we might say, we might say that data is the new oil, and data is a common good, and it is a common asset that has been, um, sequestered, uh, illegitimately by these companies. So therefore, you're not seizing what they created. You're s- you're basically saying, "I'm sorry, but you need to pay a license back to this sovereign wealth fund because you're using a common asset that you were able to essentially seize"

    26. SBSteven Bartlett1:10:53

        But you stole it fr- you stole it from Africans and British people. You stole it from people in Australia. You stole it from people in Canada.

    27. DPDaniel Priestley1:10:59

        The biggest issue that we're having is that we're actually... the nature of, uh, the entire economy is changing. So this happened 250 years ago, where the nature of the economy was land, and we had an economic system called feudalism and colonialism. And then the nature of the economy was industrialization, and we had a economic system called socialism and capitalism. And now the nature of the economy is actually fundamentally changing. So in economics, there's four factors of production; land, labor, capital, enterprise. We're now swinging like a pendulum from land through capital, labor, and now we're actually in an enterprise economy, and we need some sort of economic system that reflects the reality of how money and wealth is made at the moment.

    28. SBSteven Bartlett1:11:37

        And what is that? Is that go to an open AI, take 50% of their company, and then pay out the profits of that 50% to the people?

    29. DPDaniel Priestley1:11:45

        I'm always skeptical of any socialist ideas. Uh, if it comes from Bernie Sanders, I'm skeptical because-

    30. NHNick Hanauer1:11:50

        Okay, but Bernie Sanders is not a socialist.
25. 1:13:29 – 1:14:48

    Why Governments Struggle To Deliver

    1. DPDaniel Priestley1:13:29

       one of the biggest issues that we have is we have widespread incompetence in governments, and I'll give you a quick stat on this. In the UK government, you are 10 times more likely to die than to be fired for poor f- performance, and the UK government fires people at one-600th the rate as normal businesses for incompetence. So we have an accumulation of massive incompetence in government. So the idea... You can come up-- We can come up with all the best ideas under the sun at this table. We have a, uh, fundamentally incompetent set of people who have misaligned incentives. Uh, we have basically a revolving door between financial industrial complex, technology industrial complex and government.

    2. SBSteven Bartlett1:14:12

       How are you gonna solve that?

    3. DPDaniel Priestley1:14:12

       Well, the g- Singaporean government, they basically said that we're going to have a very high degree of meritocracy in government, that essentially we promote and fire based on outcomes and merit, merit.

    4. NHNick Hanauer1:14:24

       Singapore is a miracle of governance.

    5. DPDaniel Priestley1:14:26

       Amazing governance.

    6. NHNick Hanauer1:14:26

       It's a, it's a, it's a miracle of governance-

    7. DPDaniel Priestley1:14:29

       Yeah

    8. NHNick Hanauer1:14:29

       ... but it is a very small place. [laughs]

    9. DPDaniel Priestley1:14:31

       Yeah. No, to-totally.

    10. NHNick Hanauer1:14:32

        Um, and, and perhaps the only place in the history of planet Earth that has benefited from, uh, a well-meaning dictator.

    11. DPDaniel Priestley1:14:39

        Yeah.

    12. NHNick Hanauer1:14:40

        Right? I, I, it's a-

    13. DPDaniel Priestley1:14:40

        Well, d- yeah, Dubai

    14. NHNick Hanauer1:14:42

        ... it's, it's, it's an astonishing story of capability, competence, for-foresight,

26. 1:14:48 – 1:17:50

    The Best Fix For AI Job Loss

    1. NHNick Hanauer1:14:48

       um-

    2. SBSteven Bartlett1:14:48

       So what is the solution with this AI revolution? It's-- I think we all agree that there's gonna be job disruption, and there's gonna be a new type of job. There's gonna be probably a delta of people transitioning to those new types of jobs. Um, I've, I've said this before, but I even notice that within our recruitment processes now, we are really looking for people that have a certain set of skills.

    3. DPDaniel Priestley1:15:07

       We always ask.

    4. SBSteven Bartlett1:15:07

       And it's harder and harder and harder to find those people, um-

    5. DPDaniel Priestley1:15:11

       Well, that's training. That's education and training.

    6. SBSteven Bartlett1:15:13

       It is, and that takes time.

    7. DPDaniel Priestley1:15:14

       So the sch- the, the school system needs to produce people that you would wanna hire.

    8. SBSteven Bartlett1:15:17

       Yeah, and that takes a lot of time.

    9. DPDaniel Priestley1:15:18

       In my hiring, I ask the question: how deep are you in the AI rabbit hole?

    10. SBSteven Bartlett1:15:22

        Yeah.

    11. DPDaniel Priestley1:15:22

        And anyone who says, "Oh, a lot," I'm like, "Okay, join the team."

    12. SBSteven Bartlett1:15:26

        And, and also w- if you think about humanoid robots, Elon Musk's pay packet mandates him to deliver millions of humanoid robots, or else he doesn't get his big pay packet.

    13. DPDaniel Priestley1:15:34

        Yeah.

    14. SBSteven Bartlett1:15:34

        If we think about robotics and humanoid robots coming through... We watched the other day Figure AI release this video showing a humanoid robot sorting packages on a production line for eight days straight, beating a human sorting those packages on the production line. My car in Los Angeles now drives itself, a- as do the taxis, and there's a huge race to make autonomous vehicles. Um, I'm sure there's new jobs created, and I understand in foresight it's hard to understand what those will be. Uh, I assume there'll be more human jobs, more sales jobs. I su- you know-

    15. DPDaniel Priestley1:16:02

        My, my only thing that I can say is that it, the future is small businesses. It's, it's small teams of 10 people making YouTube channels. It's small teams of 10 people making software. It's... Like, the, the-- When you have millions and millions of little small businesses, everyone's happier.

    16. SBSteven Bartlett1:16:18

        But if you read what Anthropic released yesterday, they're making the claim that actually we're getting to a point where it will be an individual-

    17. DPDaniel Priestley1:16:25

        Yeah

    18. SBSteven Bartlett1:16:25

        ... with a team of agents who can now make a trillion-dollar company without hiring a single person. And actually, when you said about making software, making... That they would, they might argue that that'll be agents making that software. Anthropic said the, the amount of code each individual's producing on their own is eight times. And this one particular quote, which I actually screenshotted on my phone last night, comes from an engineer at Anthropic, who was saying they feel useless because now they, they say they haven't written a line of code in months and months and months. This Anthropic engineer was basically saying, like, "I come to work, this agent writes the code for me, and I kinda sit and watch, and I feel useless." Um, so all those examples you gave-

    19. DPDaniel Priestley1:17:02

        Well, what I'm... Okay, but what would happen in that situation is you would have a massive deflationary effect. The cost of... If, if there was one person doing all sorts of things in the economy, then the cost of that would go to the cost of the electricity to run it, right?

    20. SBSteven Bartlett1:17:14

        Yeah.

    21. DPDaniel Priestley1:17:14

        So massive deflationary. And then the question becomes: well, what does everyone do, right? What do we all do?

    22. SBSteven Bartlett1:17:20

        Yeah.

    23. DPDaniel Priestley1:17:20

        We do human things, right? Humans always come up with things to do with each other. Uh, like, if I was to tell my grandfather that there is a job called a personal trainer who takes you to the gym and counts your reps, right?

    24. SBSteven Bartlett1:17:32

        [laughs] Yeah.

    25. DPDaniel Priestley1:17:32

        My grandfather would go, "That's insane." And I say, "Oh, there's 50,000 personal trainers in gyms all over the country." So there are always these crazy new jobs that get created. I look at what trust fund kids do, right? 'Cause a lot of trust fund kids, they go-- They, they don't have to worry about money, and they don't have to worry about resources, and they go find something to do.

    26. SBSteven Bartlett1:17:49

        So, so-

    27. DPDaniel Priestley1:17:49

        And it's

27. 1:17:50 – 1:22:05

    Are We Heading Towards An AI Utopia?

    1. DPDaniel Priestley1:17:50

       always weird

    2. SBSteven Bartlett1:17:50

       ... we're gonna traverse through, you know, potentially the jobs we have now, involuntarily go through this transition moment where I think history's quite clear on what happens in these transition moments.

    3. NHNick Hanauer1:18:02

       It gets ugly.

    4. SBSteven Bartlett1:18:02

       It gets ugly.

    5. NHNick Hanauer1:18:03

       Yeah.

    6. SBSteven Bartlett1:18:04

       And then we'll come to... You know, what, what I'm hearing is that you're saying we will come to some kind of utopia on the other end of this.

    7. NHNick Hanauer1:18:09

       No.

    8. SBSteven Bartlett1:18:10

       No?

    9. NHNick Hanauer1:18:10

       [laughs] No, I don't think. I don't think there's gonna be utopia.

    10. SBSteven Bartlett1:18:15

        What do you think?

    11. NHNick Hanauer1:18:15

        Uh, look, I, I don't think utopias exist. I do think that markets are the greatest social technology ever invented for creating prosperity and for ennobling the human spirit. That is not because markets are efficient allocators of scarce resources, which is the conventional view. Markets are an evolutionary system that enables groups of people to come together and solve complex problems, and solutions to human problems is what prosperity actually is. It isn't GDP or money. And the best world that you can build, I think, on Earth is a market economy governed by a robust democracy that robustly includes all citizens in that economy. A- and your, your answer is small business, and I'm, I'm 100% behind you, and I, IWish you all the success. My answer is that a lot of people are gonna end up working for large companies and, or medium companies, and that we have to ensure, or p- my part of the answer is, that we have to have standards in place to ensure that those companies treat people well enough so that they can be dignified participants in both the society and the economy. And that will require i- innovation in laws and rules and all sorts of mechanisms to enable that, but that there is no alternative if you wanna live in a decent society. And, and the, but the high order bit for me and the reason I work on economics is that the existing economic paradigm basically says markets are perfectly efficient. We should just let 'em run, and, you know, w- what comes will come.

    12. SBSteven Bartlett1:19:59

        So you're really focused on increasing the workers' lives and pay.

    13. NHNick Hanauer1:20:04

        So if you understand the economy from the conventional point of view, including people in, in the economy is a liberal luxury that you can afford if and when you have growth. And I think everything the new economics says is that including more people in the economy more robustly is actually the techin- technical mechanism that makes both economies grow and democracies function.

    14. SBSteven Bartlett1:20:31

        So to simplify that, what does that mean if you, from a policy perspective?

    15. NHNick Hanauer1:20:35

        It is very hard to answer in an uncertain future. In an AI fu- if you don't know what, what's gonna happen with the economy. I mean, we have no idea how much job loss there will be. We have n- we are, we are a- I think Dan says quite rightly, going through a transition where the shape of the economy will change.

    16. SBSteven Bartlett1:20:51

        So do we do nothing through the transition?

    17. NHNick Hanauer1:20:52

        No.

    18. SBSteven Bartlett1:20:53

        What do we do?

    19. NHNick Hanauer1:20:53

        No. We aggressively experiment with ways to include more people in the economy. Bernie Sanders' idea is an experiment. What's the worst that can happen? Like, just think about it. What is the worst that can happen?

    20. DPDaniel Priestley1:21:07

        The worst would be is that you give government more money and they leverage more debt, and as soon as the government has a new asset-

    21. NHNick Hanauer1:21:13

        The, the, the, the, the economy of the United States does not need, need assets to leverage more debt.

    22. DPDaniel Priestley1:21:17

        [laughs] That's a good-

    23. NHNick Hanauer1:21:17

        We just created-

    24. DPDaniel Priestley1:21:18

        That's a good-

    25. NHNick Hanauer1:21:18

        We just created a-

    26. DPDaniel Priestley1:21:18

        A fitting... Well, yeah

    27. NHNick Hanauer1:21:20

        ... we, we, we didn't need... Th- that is not true. That is just not true. We have $37 trillion of debt, all of which was basically given away in wars or tax cuts for rich people.

    28. DPDaniel Priestley1:21:29

        Yeah.

    29. NHNick Hanauer1:21:29

        So-

    30. DPDaniel Priestley1:21:30

        But they, they can print more money and-
28. 1:22:05 – 1:24:08

    Would Higher AI Taxes Drive Companies Away?

    1. NHNick Hanauer1:22:05

       narrowly.

    2. SBSteven Bartlett1:22:05

       If I think about the UK, if you implemented something like that here, would, would people leave? So if you implemented, say we had an AI company here and you said, "Well, the UK's gonna own half of it," would that company just get up and go to-

    3. DPDaniel Priestley1:22:18

       It'd restructure somewhere else because it's digital. They, they probably would.

    4. NHNick Hanauer1:22:21

       Yeah. But you're now, you're back to this old problem, right?

    5. DPDaniel Priestley1:22:22

       The, the, the issue that I-

    6. SBSteven Bartlett1:22:22

       Because, you know, we're, we're even seeing this with the data centers. People are going... I, I read a report that said the reason OpenAI didn't open their data center in the UK, which they said they were going to, is because energy costs four times more here.

    7. NHNick Hanauer1:22:33

       Yeah.

    8. SBSteven Bartlett1:22:33

       So they said, "Well," said, "We're gonna go somewhere where it's cheap."

    9. DPDaniel Priestley1:22:35

       We're not gonna do that.

    10. NHNick Hanauer1:22:36

        Yeah.

    11. DPDaniel Priestley1:22:36

        Yeah.

    12. SBSteven Bartlett1:22:36

        And would that not be the case here where you'd get this sort of brain drain where-

    13. DPDaniel Priestley1:22:39

        Yeah. And w- w- the risk that you run with this Bernie Sanders model is that we leverage the, the government's balance sheet or non-balance sheet to take out huge debt in the name of our kids and our grandkids that they have to repay. They buy up all these intangible assets, and then they're left holding those assets that may or may not perform and may, and will have debt regardless. And then the super clever little Anthropic guys say, "Oh, actually, we're just gonna restructure to Vanuatu now, leave you guys holding all of that toxic debt, and we're gonna go run this from somewhere else." That could happen.

    14. SBSteven Bartlett1:23:14

        The other thing that could happen is if, let's say OpenAI, as one example, are making 100 pounds profit at the moment, $100 profit at the moment, and Bernie Sanders says, "We want $50 of that profit," China are gonna have an additional fif- theoretically, an additional $50 to invest in their frontier models-

    15. NHNick Hanauer1:23:32

        Yeah

    16. SBSteven Bartlett1:23:32

        ... in getting ahead.

    17. NHNick Hanauer1:23:33

        Bernie isn't saying, "I'll, I'll take $50 of your, 50% of your profit."

    18. SBSteven Bartlett1:23:37

        What is he saying?

    19. NHNick Hanauer1:23:37

        He's saying, "I'll take 50% of your stock."

    20. SBSteven Bartlett1:23:39

        Which means that then the US would have a equal voting?

    21. NHNick Hanauer1:23:43

        Yeah. Why not?

    22. SBSteven Bartlett1:23:44

        Power? Well, then you're gonna get gridlock in terms of voting, right? So if the US own 50% of the company and Sam Altman, let's say, owns 50%, they're gonna have to vote on decisions.

    23. NHNick Hanauer1:23:54

        Well, you could put some directors from the c- from, from the public on that board.

    24. SBSteven Bartlett1:23:57

        And what happens when it-- to a company when you have the government on the, on the voting board of directors?

    25. DPDaniel Priestley1:24:02

        Mm. Yeah.

    26. NHNick Hanauer1:24:02

        From the s- I mean, you effectively have this in lots of countries where labor has a seat at the table, right?

29. 1:24:08 – 1:30:32

    Does Government Improve Lives?

    1. SBSteven Bartlett1:24:08

       With, with one of your companies-

    2. DPDaniel Priestley1:24:09

       Germany has

    3. SBSteven Bartlett1:24:09

       ... if half of your board were the government, do you think you'd be able to be as innovative, move as fast? I mean, we talked about the bureaucracy of, of the government.

    4. NHNick Hanauer1:24:15

       Yeah. I, I, I'm not suggesting that half the directors-

    5. DPDaniel Priestley1:24:17

       Well, essentially that's-

    6. NHNick Hanauer1:24:18

       ... should be on the government

    7. DPDaniel Priestley1:24:19

       ... yeah, mind you, that's what China has as well. China has got essentially the, the CCP on the board of all of those companies now as well.

    8. NHNick Hanauer1:24:25

       Yes. Yeah.

    9. DPDaniel Priestley1:24:25

       Right? So-

    10. NHNick Hanauer1:24:25

        And they work, and they move pretty fast.

    11. SBSteven Bartlett1:24:27

        A slightly different government, isn't it?

    12. DPDaniel Priestley1:24:28

        Yeah. It, it is, and there's different levels of competence-

    13. NHNick Hanauer1:24:31

        Yeah

    14. DPDaniel Priestley1:24:31

        ... and a, and meritocracy hierarchy. I, I, I worry about all of these solutions that empower government 'cause I don't trust government. My entire life has been one thing after the next made worse by government, right? That's m- that's my reality, born in 81, 1981. I've never had a good experience with government.

    15. NHNick Hanauer1:24:46

        Okay, but dude, you, you grew up in Australia, and you live in the UK. If you hate government so much, move to the Congo.

    16. DPDaniel Priestley1:24:57

        [laughs] Good point.

    17. NHNick Hanauer1:24:58

        Seriously.

    18. DPDaniel Priestley1:24:59

        Yeah.

    19. NHNick Hanauer1:24:59

        You are... Y- y- look, I, I mean, it is just, no one likes to be constrained. Everyone wants other people held to a high standard. And it, it just, y- y- uh, seriously, there is no libertarian paradise in the world-Where nobody follows any rules, nobody pays any taxes, and everybody lives like a king. If you hate government, there are plenty, there are 220 countries in the world. 150 of them effectively have no government. Why do you not move your base of operations to those places? Because you would instantly be somebody's [laughs] you know, lunch. [laughs] You know

    20. DPDaniel Priestley1:25:36

        I'm not, I'm, I'm not an anarchi- I'm not an anarchist. When a government doesn't fire incompetent people-

    21. NHNick Hanauer1:25:42

        Okay. Uh, and look

    22. DPDaniel Priestley1:25:42

        ... right?

    23. NHNick Hanauer1:25:43

        But everybody agrees with this

    24. DPDaniel Priestley1:25:44

        The, the, the pre- the previous governments-

    25. NHNick Hanauer1:25:46

        Everybody agrees

    26. DPDaniel Priestley1:25:47

        ... right?

    27. NHNick Hanauer1:25:47

        Democracy is the worst econo- is the worst

    28. DPDaniel Priestley1:25:49

        Except for all the others

    29. NHNick Hanauer1:25:50

        ... except all the others, right?

    30. DPDaniel Priestley1:25:51

        Yeah.
30. 1:30:32 – 1:33:09

    Where They Fundamentally Disagree

    1. DPDaniel Priestley1:30:32

       And I-

    2. NHNick Hanauer1:30:32

       What is that inch?

    3. DPDaniel Priestley1:30:33

       So I've seen Nick's policies implemented, and I don't feel it's enough. And the reason I don't feel it's enough is I think people are more than consumers, they're more than wallets.

    4. NHNick Hanauer1:30:41

       Okay, you've only heard me talk about the minimum wage and something else. You haven't seen all the policies, [laughs] so...

    5. DPDaniel Priestley1:30:45

       But the missing piece for me is ownership. When people had houses, they felt really good about communities. When people had small businesses that they owned, they felt really good about their communities. And when people own some shares in the overall economy of the fastest-growing companies in the economy, then they feel like they're participating. So for me, the non-negotiables of fixing this problem is that people can easily own a house, own a business, and own shares in the fastest-growing economy.

    6. NHNick Hanauer1:31:13

       Yes, yes, yes, and how do we get there? [laughs]

    7. DPDaniel Priestley1:31:16

       Yeah.

    8. NHNick Hanauer1:31:17

       Yes, yes, yes, I totally agree, and I think... I, I just think that Dan and I have a slightly different view on the path to get-

    9. DPDaniel Priestley1:31:23

       I think ca- capitalism is ownership. It's ownership.

    10. NHNick Hanauer1:31:26

        Yes.

    11. DPDaniel Priestley1:31:26

        That's what capitalism is. OtherwiseYou, if you don't own anything, you're not a capitalist. If we, we-

    12. NHNick Hanauer1:31:32

        Now, you, you-

    13. DPDaniel Priestley1:31:32

        Look, your whole, your whole story

    14. NHNick Hanauer1:31:33

        ... agree on the path, but the s- the, the... Sorry, you agree on the outcome, but the path-

    15. DPDaniel Priestley1:31:36

        Yes. But how did Nick get rich? Like, Nick started companies. He owned, he owned a family business. He leveraged the family business into an investment into Amazon.

    16. NHNick Hanauer1:31:46

        Yeah. Born on third base. [laughs]

    17. DPDaniel Priestley1:31:47

        It's, it's owner- but it's ownership, ownership, ownership, and did a lot with it.

    18. NHNick Hanauer1:31:50

        Okay.

    19. DPDaniel Priestley1:31:51

        Right?

    20. NHNick Hanauer1:31:51

        Fair. But-

    21. DPDaniel Priestley1:31:52

        But, but I'm saying, but it's-

    22. NHNick Hanauer1:31:53

        Let's be, let's be fair. Let's be clear.

    23. SBSteven Bartlett1:31:53

        So but how is that applicable? You're saying other people should do what Nick did?

    24. NHNick Hanauer1:31:56

        Yeah, but it's hard to get born into a family that owns a small business and-

    25. DPDaniel Priestley1:32:00

        Well, if there's more people who own small businesses, then there are more-

    26. NHNick Hanauer1:32:03

        Then it's easier

    27. DPDaniel Priestley1:32:04

        ... then there, it is easier, right? I, I just want to... I, I do want more people to be-

    28. SBSteven Bartlett1:32:07

        What, what do you mean by this?

    29. NHNick Hanauer1:32:08

        Well, it, it's all about how, how you get there, right? The-

    30. DPDaniel Priestley1:32:11

        But if, you overlook the fact being born on third base, we should aim for more people to be born on third base. If more people had-
31. 1:33:09 – 1:37:28

    Is Socialism The Answer?

    1. SBSteven Bartlett1:33:09

       Is socialism the answer?

    2. NHNick Hanauer1:33:10

       No. Uh, uh, socialism is most definitely not the answer, because socialism, a- again, we're, we, we, we need to operationally define that term.

    3. SBSteven Bartlett1:33:18

       Yeah.

    4. NHNick Hanauer1:33:18

       If, i- i- socialism means, look it up in the dictionary, the state ownership of the means of production. That is a catastrophe, right? And it's a catastrophe because all socialism can do is split up existing prosperity in a fairer way. It can do that. The problem is, is that socialism does not know how to create more prosperity.

    5. SBSteven Bartlett1:33:43

       Okay.

    6. NHNick Hanauer1:33:43

       So for one minute, you can make everybody better off, but 10 years later, everyone is poor. Because once... Because this is the power of markets, is what markets do as evolutionary systems, is they generate increasing prosperity. They, th- that's what solutions to human problems is, right? Going from aspirin to antibiotics is economic progress, right? And the beauty of markets is they, they're evolutionary systems where every business effectively is an organism competing to fill a niche.

    7. DPDaniel Priestley1:34:17

       Yeah.

    8. NHNick Hanauer1:34:17

       Which is the perfect product for whatever market segment they're creating. You're, you're a canonical example of this, right? What you have done here. And thank goodness for it, right? Because in a world where there wasn't capitalism, there's no way y- y- you, you have effectively independently created what was a television network. It's miraculous. Like you have more reach than MSNBC, dude. That is the power of markets. But y- you know, they have to be harnessed to benefit people broadly. This does not mean that the profit mo- motive shouldn't exist, but a- and, and-

    9. SBSteven Bartlett1:34:53

       But how, though? This is what I'm trying to get to. And this sounds a little bit like there's this middle ground we're, like, playing with, where socialism on one end is, okay, you know, short term, whatever you said. Then on the other end, you've got this, like, extreme capitalist approach.

    10. NHNick Hanauer1:35:05

        Yeah.

    11. SBSteven Bartlett1:35:05

        And I was looking at-

    12. NHNick Hanauer1:35:06

        Yeah, those are the laissez-faire capitalism, right? And this socialist status control. Both of those things are terrible ideas.

    13. SBSteven Bartlett1:35:14

        Am I right in thinking-

    14. NHNick Hanauer1:35:14

        We want something in the middle

    15. SBSteven Bartlett1:35:15

        ... on, on the left side then, on the socialism side-

    16. NHNick Hanauer1:35:17

        Yeah

    17. SBSteven Bartlett1:35:17

        ... you get lower growth in your economy over the long term?

    18. NHNick Hanauer1:35:20

        Correct.

    19. SBSteven Bartlett1:35:21

        Okay. And then in a capitalist economy, you might have higher growth, but then you have more inequality.

    20. DPDaniel Priestley1:35:26

        Yes.

    21. NHNick Hanauer1:35:26

        Correct. And the sweet spot, and this is, this is the w- one of the most important, this is an important matter, one of the most important points I would like to make, is that all of the evidence suggests that when you come to the middle and you have a market economy that is actually actively managed to include people, that is the growth sweet spot.

    22. SBSteven Bartlett1:35:49

        Okay.

    23. NHNick Hanauer1:35:49

        You have more growth. So, so-

    24. SBSteven Bartlett1:35:52

        You have more growth?

    25. NHNick Hanauer1:35:53

        Absolutely. GDP growth rates in the United States were 4, 4.5% for decades, '40s, '50s, '60s. And then as soon as the neoliberals took over in 1975, GDP growth rates fell first to 3% and now to 2%.

    26. SBSteven Bartlett1:36:07

        When they did what?

    27. NHNick Hanauer1:36:09

        Cut taxes for rich people, deregulated powerful people, and suppressed wages for everybody else. So the most important socioeconomic fact, as I've said many times before, in the United States, is that the median full-time worker earns about $60,000 a year today. If they had maintained their same share of GDP since 1975, instead of earning 60, they would earn $120,000 a year.

    28. SBSteven Bartlett1:36:32

        So there's, you're saying-

    29. NHNick Hanauer1:36:32

        So-

    30. SBSteven Bartlett1:36:32

        ... there's no trade-off in the middle? Because there's trade-offs on both ends, right? We just described the trade-offs.
32. 1:37:28 – 1:43:05

    How Policy Builds A Strong Middle Class

    1. NHNick Hanauer1:37:28

       got another... Y- you have a, y- you have a, you have a, a great graph in here. So for decades-As productivity grew, everybody benefited. And then in the '70s, it decoupled. And as soon as it decoupled, GDP growth rates fell, right? If we had... And, and all of this, th- all of this was a consequence of policy, of policy. So here's another thing the new economics teaches, is that there's this idea that a middle class, a thriving middle class, is the consequence of economic growth, that if we just let the economy grow, we'll get this great middle class, and that is because economists assume the eco- the economy is something called ergodic. Now, ergodic means... Let me show you the difference between two games. One is ergodic, one is non-ergodic. Rock, paper, scissors is an ergodic game, and what that means is the outcome of the next game has nothing to do with the game before.

    2. SBSteven Bartlett1:38:28

       Yeah.

    3. NHNick Hanauer1:38:29

       Right? Monopoly is a non-ergodic game. And in Monopoly, no matter how much, how many times you go to Monopoly school, if you play a game of Monopoly long enough, one person will own everything and everybody else will have nothing, and that is what a market economy is. It is characterized by luck, path dependence, and compounding.

    4. SBSteven Bartlett1:38:52

       The past.

    5. NHNick Hanauer1:38:53

       The pa- Well, it's the past, right?

    6. DPDaniel Priestley1:38:55

       Compounding.

    7. NHNick Hanauer1:38:55

       Where you start.

    8. SBSteven Bartlett1:38:56

       Yeah.

    9. NHNick Hanauer1:38:56

       Right? Some of us started on third base. Some of us, like you, as I recall, started on actually first base or home plate-

    10. SBSteven Bartlett1:39:04

        Well

    11. NHNick Hanauer1:39:04

        ... or something like that.

    12. SBSteven Bartlett1:39:05

        Yeah. Well, I think, yeah, pro- probably second base.

    13. NHNick Hanauer1:39:07

        Okay, maybe second base, but whatever. But we can-

    14. SBSteven Bartlett1:39:09

        I had parents that loved me, electricity, a house.

    15. NHNick Hanauer1:39:11

        Yeah, okay, fair point, right? And you're very capable and good-looking and all the rest of it, right?

    16. SBSteven Bartlett1:39:16

        Thank you.

    17. NHNick Hanauer1:39:16

        It could, it could... No, I mean, just, if we're just being honest, right?

    18. SBSteven Bartlett1:39:19

        Yeah.

    19. NHNick Hanauer1:39:19

        We're just being honest. You had some natural advantages. But y- you know, in Monopoly, you land on Park Place the first roll, you're rolling. You get four good rolls in Monopoly, you're gonna win the game, right?

    20. SBSteven Bartlett1:39:30

        Mm-hmm.

    21. NHNick Hanauer1:39:30

        And compounding, the better you do, the better you do. And the thing about in a, in an non er- ergodic system is that both advantages and disadvantages compound. Surely you know people in your life who've had a couple of things of bad luck, right?

    22. SBSteven Bartlett1:39:44

        Yeah.

    23. NHNick Hanauer1:39:44

        And then they spiral into-

    24. SBSteven Bartlett1:39:46

        Yeah

    25. NHNick Hanauer1:39:46

        ... oblivion, right? And so what that means is that a, a middle class, and thus a high-functioning society with social cohesion, is always, always a, a deliberate construction. It is always created by policy. Always. And all of these things that we are pushing back against, him and his way, me and my way, are a consequence of basically an economic theory that said to policymakers, "Do it that way," and it was a mistake. And we should recognize that mistake and try to heal these mistakes, which we can. We can have a great society. We can have an ownership society. We can have anything we want. We just have to decide to do it and not let a small group of incredibly rich people dictate the terms of the economy. This is within our grasp.

    26. SBSteven Bartlett1:40:40

        What are your thoughts, Dan?

    27. DPDaniel Priestley1:40:40

        I agree in principle with all of that, especially the last bit, a small group of very, very powerful people dictating the economy-

    28. NHNick Hanauer1:40:46

        Right

    29. DPDaniel Priestley1:40:46

        ... meeting up in Davos-

    30. NHNick Hanauer1:40:47

        Yeah
33. 1:43:05 – 1:45:16

    Ads

    1. DPDaniel Priestley1:43:05

       Yeah.

    2. SBSteven Bartlett1:43:05

       [page flips] I've got 60 seconds, and I'm gonna show you how much I can get done because of our sponsor called Wispr Flow. It's a business I invested in that turns your speech into text in any app or device. I'm gonna post into our Slack channel which rewards whichever team member conducted the most experiments this week. Hi, everyone. Here is this week's experimenter of the week. Congratulations to the Diary Of A CEO trailer team, which is Ant, Liv, Dom, and Cam. You guys have won. Okay, now I'm gonna open Gmail. So here is one of our founders on an email chain that I want to connect my team with. All I have to say is, "Add my team's emails," and Wispr will do exactly that. Now a quick message to Juan, who does my schedule every single week. Hey, Juan. It's Steven here. Can I record on Wednesday at 2:00 PM? Actually, no. Do you know what? Let's record at 3:00 PM on WednesdayWispr Flow is four times faster than typing, and it is incredibly easy to use. So if you wanna give it a go, all you have to do is head to wisprflow.ai/stephen to download it today. [paper rustles] I've done almost 700 interviews with some of the most interesting people in the world, and one of the things you learn, which is unexpected, is that vulnerability is the doorway to connection. And after sitting here for two, three hours with a guest, I feel a deep sense of connection to them. And as they leave, what I get them to do is to write a question in The Diary Of A CEO. We've taken all of the questions from The Diary Of A CEO. We have put the question here on this card with the name of the person that wrote it, so you can sit at home, as I do with my fiancée and my colleagues at work and other people in my life. Whenever we get a minute, we play The Diary Of A CEO conversation cards, and it is incredible what happens. These are great if you're in a romantic relationship and you wanna connect your partner more. These are also great if you're in a team and you want to bond your team together. And I have to say they're also great for families that wanna learn more about each other and that need a good excuse to spend some time in a digital world, in the analog environment, connecting human to human. It is remarkable what the right question at the right time can do. Go to thediary.com, and you can get these conversation cards right now. [paper rustles]

34. 1:45:16 – 1:48:38

    Which Economies Are Thriving Today?

    1. SBSteven Bartlett1:45:16

       One thing I find interesting is you're saying that there's this sweet spot in the middle-

    2. NHNick Hanauer1:45:19

       Yes

    3. SBSteven Bartlett1:45:20

       ... where you, you still get the, the upside.

    4. NHNick Hanauer1:45:22

       You get dynamism-

    5. SBSteven Bartlett1:45:23

       You think there's a sweet spot in the middle?

    6. NHNick Hanauer1:45:23

       ... and decency.

    7. DPDaniel Priestley1:45:25

       [sighs] It's a very narrow sweet spot, and it's very hard to achieve because Germany has really tried so hard, and they've like... They- their economy's collapsing. They- their economy's going so badly at the moment, um, and they've tried everything. They've got... Workers have to be on the board, for example, of every company. You've gotta have a worker on the board. So they're, like, doing as much as they can to in- do inclusion, and the German e- economy-

    8. NHNick Hanauer1:45:50

       Okay, but-

    9. SBSteven Bartlett1:45:50

       So where has it worked?

    10. NHNick Hanauer1:45:50

        Okay, but he- here's the thing is it, it, it is simply not fair to say the German economy is collapsing. Uh, like, have you been to Germany?

    11. DPDaniel Priestley1:46:00

        [laughs] Yeah.

    12. NHNick Hanauer1:46:01

        Like, g- come on. Like, h- have you been to Stockholm?

    13. DPDaniel Priestley1:46:05

        Okay, but-

    14. NHNick Hanauer1:46:05

        Like, these places are incredibly-

    15. DPDaniel Priestley1:46:06

        There's definitely, there's definitely a-

    16. NHNick Hanauer1:46:08

        ... high-functioning.

    17. DPDaniel Priestley1:46:08

        Yeah, there's definitely a forward momentum, but the German car industry's getting hollowed out right now.

    18. NHNick Hanauer1:46:13

        China.

    19. DPDaniel Priestley1:46:14

        Right? China's doing that.

    20. NHNick Hanauer1:46:15

        Right. Okay, but just because workers are on the board of German companies-

    21. DPDaniel Priestley1:46:20

        Yeah

    22. NHNick Hanauer1:46:20

        ... th- th- th- a- a- and German people are unhappy, the- you, you-

    23. DPDaniel Priestley1:46:24

        Mm-hmm

    24. NHNick Hanauer1:46:24

        ... you can't necessarily connect these things.

    25. DPDaniel Priestley1:46:27

        I just want to acknowledge, though, that, like, there are places like Dubai, which are very close to laissez-faire capitalism with a sovereign wealth fund, and-

    26. NHNick Hanauer1:46:35

        To-

    27. DPDaniel Priestley1:46:35

        Just, just ho- just hold on.

    28. NHNick Hanauer1:46:36

        Okay.

    29. DPDaniel Priestley1:46:37

        If you talk to someone who lives in Dubai, they freaking love Dubai. Like, they, they are s- they're the happiest people, uh, like, and they talk-

    30. SBSteven Bartlett1:46:45

        Who, though?
35. 1:48:38 – 1:51:46

    What If You're Not Entrepreneurial?

    1. SBSteven Bartlett1:48:38

       What if you're not ambitious?

    2. DPDaniel Priestley1:48:38

       And they leave. I think you're benefited by a lot of the ambitious people. So when, when you get one in a hun- If, if you get one in 10 people who are entrepreneurial or one in 100 people who are entrepreneurial, they're creating optionality, they're creating companies-

    3. SBSteven Bartlett1:48:50

       Do you think the US is this? The US is, uh, sort of set up, you know, the American dream. This is more of a US approach, isn't it?

    4. DPDaniel Priestley1:48:57

       Well-

    5. SBSteven Bartlett1:48:57

       And what we have there is higher inequality.

    6. DPDaniel Priestley1:48:58

       Well, I'll give you two... To, to one extreme, the US, you hit the top rate of t- income tax when you hit $700,000.

    7. SBSteven Bartlett1:49:05

       Mm-hmm.

    8. DPDaniel Priestley1:49:06

       In the UK, it's 100,000, and, and it immediately goes to 60% tax, 62% tax, and then it drops to 45% after that. Uh, like, but there's this kind of like-

    9. NHNick Hanauer1:49:16

       Does it really?

    10. DPDaniel Priestley1:49:17

        Yeah, it's this h- it's this h- it's this weird pains-

    11. NHNick Hanauer1:49:19

        Sorry. I should know that, but I don't. [laughs]

    12. DPDaniel Priestley1:49:20

        No, it's this insane thing where you basically pay 20%, 40%, 60%, 45%, and it's this kind of wonky-

    13. SBSteven Bartlett1:49:28

        But to the point of-

    14. NHNick Hanauer1:49:28

        Yeah, you should probably fix that

    15. DPDaniel Priestley1:49:29

        ... well, people, people leave.

    16. SBSteven Bartlett1:49:30

        Are you saying you prefer the US? The US approach sounds more like what you're saying.

    17. DPDaniel Priestley1:49:32

        People are leaving to the US. Like, a lot of Brits are actually going to the US.

    18. SBSteven Bartlett1:49:35

        And the US has an inequality, has higher inequality.

    19. DPDaniel Priestley1:49:38

        Uh, well, you can-

    20. SBSteven Bartlett1:49:38

        Which means it's probably more likely that the pitchforks will come out.

    21. DPDaniel Priestley1:49:41

        Well, for an ambitious person, they don't care about inequality, right? Inequality is the opportunity to get ahead.

    22. SBSteven Bartlett1:49:47

        Yeah, they might not.

    23. DPDaniel Priestley1:49:47

        Right.

    24. SBSteven Bartlett1:49:47

        But, like, from a s- social perspective, the pitchforks are probably gonna come out sooner in the US because of that inequality than in somewhere else.

    25. DPDaniel Priestley1:49:55

        I, they seem-

    26. SBSteven Bartlett1:49:56

        If we're saying there's a correlation-

    27. DPDaniel Priestley1:49:57

        They seem to be coming out here in a big way. Like here in-

    28. SBSteven Bartlett1:49:59

        Th- they're coming out here, but they're also coming out in the United States.

    29. DPDaniel Priestley1:50:01

        Like, look at, look at Zach Polansky, uh, is, is gaining a huge p- political movement.

    30. SBSteven Bartlett1:50:07

        Zoran Mandić in the U- UK.
36. 1:51:46 – 1:53:46

    Why Not Everyone Should Be An Entrepreneur

    1. DPDaniel Priestley1:51:46

       this."

    2. SBSteven Bartlett1:51:46

       Do, do you think there's a chance that we have a, a bit of a bias as entrepreneurs?

    3. NHNick Hanauer1:51:50

       Yes.

    4. SBSteven Bartlett1:51:50

       Everybody at this table is an entrepreneur.

    5. NHNick Hanauer1:51:52

       Yes.

    6. SBSteven Bartlett1:51:52

       And for whatever reason, I think a lot of mine might be some, like, I don't know, trauma or whatever, I had a bias towards setting up a business and taking that risk, whereas, like, my other three siblings, they didn't do that. And I don't know what I did to have that bias within me. Like, if you really think about it, I... It, it was probably something my parents didn't intend to do, which meant that at 18 when my four-- three siblings went to university and sort of followed that more, one could say safer part, well, yeah, safer path, I dropped out.

    7. NHNick Hanauer1:52:19

       How angry were your parents when you dropped out?

    8. SBSteven Bartlett1:52:20

       Oh, they didn't speak to them. My mom was... Yeah. My mom's Nigerian as well, so she didn't-

    9. NHNick Hanauer1:52:24

       Very cross

    10. SBSteven Bartlett1:52:24

        ... she left school when she was a child, didn't get an education, can't read, can't write.

    11. NHNick Hanauer1:52:27

        That must have been a tough-

    12. SBSteven Bartlett1:52:28

        Tough is a-

    13. NHNick Hanauer1:52:29

        ... conversation

    14. SBSteven Bartlett1:52:29

        ... under- understatement of, of-

    15. NHNick Hanauer1:52:31

        Yeah. [laughs]

    16. SBSteven Bartlett1:52:31

        ... what happened. But for whatever reason, that's the path that I took, and I'm, I, I can acknowledge that I'm in a bit of a m- minority.

    17. NHNick Hanauer1:52:38

        Yeah.

    18. SBSteven Bartlett1:52:38

        And I think I sometimes consider, like, maybe I don't realize that through privilege or through some genetic privilege or whatever, I had this particular orientation towards, like, entrepreneurialism that maybe other people don't always have.

    19. NHNick Hanauer1:52:51

        Yeah.

    20. SBSteven Bartlett1:52:51

        And that means that to start the grocery store-

    21. DPDaniel Priestley1:52:54

        I, I get crucified in the comments. "Not everyone can be an entrepreneur," right?

    22. SBSteven Bartlett1:52:57

        Yeah.

    23. DPDaniel Priestley1:52:57

        I'm not saying everyone can be an entrepreneur. I've never said that. I'm saying-

    24. SBSteven Bartlett1:53:00

        But the grocery store analogy there is-

    25. DPDaniel Priestley1:53:02

        I'm saying-

    26. SBSteven Bartlett1:53:02

        ... someone would start that grocery store if it was easier.

    27. DPDaniel Priestley1:53:04

        Well, well-

    28. SBSteven Bartlett1:53:05

        But not everybody would

    29. DPDaniel Priestley1:53:06

        ... there's always a risk-to-reward ratio, and government brings in all sorts of regulations, and government only really thinks about big businesses. If you talk to anyone in government, small businesses don't exist, and they just simply think, "Why hasn't Tesco done it?" Or, "Why hasn't, like, Walmart done it?"

    30. NHNick Hanauer1:53:19

        Yeah.
37. 1:53:46 – 1:56:16

    How To Help Small Businesses Thrive

    1. SBSteven Bartlett1:53:46

       your friend's pub.

    2. DPDaniel Priestley1:53:47

       Yeah.

    3. NHNick Hanauer1:53:47

       Right?

    4. DPDaniel Priestley1:53:47

       And this is the thing-

    5. SBSteven Bartlett1:53:47

       Yeah. So what do you do about that?

    6. NHNick Hanauer1:53:49

       Uh, uh, so what I would do, uh, i- is I would, I would... Uh, and, and again, in the United States, we used to have lots of laws that pointed the economy towards small businesses. So if I was in charge, I would impose a much higher minimum wage, but I would do it progressively. Uh, all the labor standards, all the st- all of the regulations would be imposed progressively. And in terms of regulation, I would make it far... Uh, like, for a big company, there's a lot of regs, right? You have to follow every rule to the T. For a small business, you have a lot more flexibility.

    7. DPDaniel Priestley1:54:22

       Yeah.

    8. NHNick Hanauer1:54:23

       It's impo-

    9. DPDaniel Priestley1:54:23

       I love that

    10. NHNick Hanauer1:54:24

        ... uh, because, because we need the standards, but it turns out to be really hard as a single proprietor even to, even to read the manual, right?

    11. DPDaniel Priestley1:54:32

        Yeah.

    12. NHNick Hanauer1:54:32

        To know what you're supposed to do.

    13. DPDaniel Priestley1:54:33

        Yeah.

    14. NHNick Hanauer1:54:34

        So to me, it would all be progressive, so it would be easy to get capital, easy to start a business relatively unencumbered by, by regulation, although constrained to a certain ex-

    15. DPDaniel Priestley1:54:45

        To some extent

    16. NHNick Hanauer1:54:45

        ... extent because-

    17. DPDaniel Priestley1:54:45

        Yep

    18. NHNick Hanauer1:54:46

        ... there are terrible things that small business people do, too.

    19. SBSteven Bartlett1:54:48

        Wait, how do you make it easier to get capital?

    20. NHNick Hanauer1:54:50

        Oh, you could have government programs that were designed to help-

    21. DPDaniel Priestley1:54:53

        Well, we have the-

    22. NHNick Hanauer1:54:53

        ... small businesses get off the ground

    23. DPDaniel Priestley1:54:54

        ... uh, we have the British bank that, uh, underwrites-

    24. NHNick Hanauer1:54:57

        We used to have the... We, we-

    25. DPDaniel Priestley1:54:58

        ... underwrites for the first 25,000 of loans here in-

    26. NHNick Hanauer1:55:00

        Yeah, we used to have the Small Business Administration in the United States. They did a lot of that work.

    27. DPDaniel Priestley1:55:04

        Yeah. So we, we have a lending institution here-

    28. NHNick Hanauer1:55:06

        Yeah

    29. DPDaniel Priestley1:55:06

        ... that is, uh, 75% underwritten by government for 25,000 pound startup loan, right? So there is some, some schemes that can, can work. I started all my companies on a, on a credit card. The key thing is, is there's a difference between entrepreneurials and startups that are intending to scale and just small businesses that want to exist as a small business. I'm really big on the idea that we wanna, we want communities that have lots of small businesses, even if they have no intention to scale and exit and any of those sorts of things.

    30. NHNick Hanauer1:55:31

        Right.
38. 1:56:16 – 1:57:41

    Can Regulation Help Small Business Win?

    1. SBSteven Bartlett1:56:17

       So they got rid of the restrictions on-

    2. NHNick Hanauer1:56:19

       Yeah. There, there used to be express laws to make sure that big companies could not buy ra- raw materials cheaper than, than small companies.

    3. SBSteven Bartlett1:56:26

       Mm-hmm.

    4. NHNick Hanauer1:56:26

       Like, when I was young, when I was your age, if you wanted to buy a competitor, you were sweating bullets because you ha- that had to be reviewed by a body, and if they thought that you were consolidating too much, they would just say no.

    5. SBSteven Bartlett1:56:42

       But if you think of, I think about all my friends that have opened retail stores through their companies, and they c- they only do that when they get really big because their e-com business is supporting it. So if you think about, I don't know, the Gymsharks, the Represent-

    6. NHNick Hanauer1:56:52

       Yeah, yeah

    7. SBSteven Bartlett1:56:52

       ... Under Armour. So you can't-

    8. NHNick Hanauer1:56:54

       Okay, with respect to retail, you are largely correct.

    9. SBSteven Bartlett1:56:57

       Yeah.

    10. NHNick Hanauer1:56:57

        It depends on what kind of retail. Like, you could have a gym. You can't e-commerce a gym or, you know, there are all kinds of retail, some of which is somewhat immune from e-commerce and some of which is getting destroyed by e-commerce. Doesn't, it doesn't matter if we're talking about retail. There were, uh, uh, regional manufacturing companies, regional everything.

    11. SBSteven Bartlett1:57:15

        Sure.

    12. NHNick Hanauer1:57:16

        And it all went away, and you have never experienced a world in which that used to exist. Like, your, your entire business experience is this sort of neoliberal world of giant companies.

    13. DPDaniel Priestley1:57:28

        That's true. And the world I grew up in, we-

    14. NHNick Hanauer1:57:31

        Yeah, we're-

    15. DPDaniel Priestley1:57:31

        Like, I-

    16. NHNick Hanauer1:57:31

        Y- young-

    17. DPDaniel Priestley1:57:32

        I'm slightly-

    18. NHNick Hanauer1:57:32

        ... medium, old. [laughs]

    19. DPDaniel Priestley1:57:33

        Right? But I, I remember what it was like-

    20. NHNick Hanauer1:57:36

        Yeah

    21. DPDaniel Priestley1:57:36

        ... to go to the video store and select videos-

    22. NHNick Hanauer1:57:38

        Right

    23. DPDaniel Priestley1:57:38

        ... from the video store.

    24. SBSteven Bartlett1:57:40

        I used to do that-

    25. DPDaniel Priestley1:57:40

        I remember what it was like-

39. 1:57:41 – 2:01:40

    Ending Taxes For Lower-Income Earners

    1. SBSteven Bartlett1:57:41

       ... with my dad. [laughs]

    2. DPDaniel Priestley1:57:41

       Yeah. Like, I remember going to the CD store and listening to music and talking to the retail employees. When I was growing up, the cool kids worked at the CD store, the geeky kids worked at the bookstore, and everybody worked at the, everyone else worked at the grocery store.

    3. NHNick Hanauer1:57:54

       Yeah.

    4. DPDaniel Priestley1:57:55

       And all of those business models are gone.

    5. NHNick Hanauer1:57:57

       Yeah.

    6. DPDaniel Priestley1:57:57

       And this is what I mean we need to kinda tip back towards-

    7. NHNick Hanauer1:58:00

       Yeah

    8. DPDaniel Priestley1:58:00

       ... small business experimentation being protected and all of that.

    9. NHNick Hanauer1:58:04

       Yeah.

    10. DPDaniel Priestley1:58:04

        The other thing too, and I should, should raise this about minimum wage and giving people more money, the bottom half of taxpayers in the UK pay 9.5% of all the, uh, income taxes. The government could remove taxes off of 50% of workers in one move, and it would cost 33 billion, and you just get rid of that, and then every single person in the bottom half of income earners gets a 10% pay rise to 15% pay rise, right?

    11. SBSteven Bartlett1:58:30

        I love it.

    12. DPDaniel Priestley1:58:30

        No.

    13. SBSteven Bartlett1:58:30

        So where do we get the 32 billion from?

    14. DPDaniel Priestley1:58:32

        But, but just, just keep in mind, their budget is 1.4 trillion.

    15. SBSteven Bartlett1:58:35

        I know, I know, I know.

    16. DPDaniel Priestley1:58:36

        Well-

    17. SBSteven Bartlett1:58:36

        But we're gonna have to, if we, if we-

    18. DPDaniel Priestley1:58:37

        1.4 trillion-

    19. SBSteven Bartlett1:58:38

        You click your fingers

    20. DPDaniel Priestley1:58:38

        ... you're talking about this much-

    21. SBSteven Bartlett1:58:39

        I know, I know, but you said-

    22. DPDaniel Priestley1:58:39

        ... to take 15 million people-

    23. SBSteven Bartlett1:58:41

        Yeah, I agree. I'm just saying, where does the money c- 'cause I know what's gonna happen. Keir Starmer's saying they found this 20 million, billion, $20 billion black hole in the finances, and they, and that's the reason why they're saying they've had to cut back on pensions and these kinds of things. So if we add another 30 billion to that, wh- where, where do we, where do we get the money from?

    24. DPDaniel Priestley1:58:58

        Y- you're talking about reduce the, the amount of administrative burden to tax 15 million people and keep on top of the tax on 15 million people. Just the sheer volume of people who have to work at HMRC to-

    25. SBSteven Bartlett1:59:10

        I completely agree

    26. DPDaniel Priestley1:59:11

        ... all of this insanity.

    27. SBSteven Bartlett1:59:12

        No, but I'm saying, where does the money come from?

    28. DPDaniel Priestley1:59:13

        Yeah. So out of 1.4 trillion, I'm pretty sure we could find half of one perc- 1% of it or whatever to g- to get these number of people-

    29. SBSteven Bartlett1:59:21

        Mm

    30. DPDaniel Priestley1:59:21

        ... out of tax. Um, I think we could tax big corporations who are taking the piss. Uh, and I also think the economic spending rounds of getting those people, those poor, the poorer half of p- people should not be paying tax. If you give them more money, they'll spend more money, right? They're not gonna-
40. 2:01:40 – 2:09:40

    The Global Economy's Biggest Problem

    1. NHNick Hanauer2:01:40

       and Steve, I think all your questions are really, really good, but they all point to the same thing, which i- it, which is that, uh, you know, the economy is a collective action problem.

    2. SBSteven Bartlett2:01:50

       Mm-hmm.

    3. NHNick Hanauer2:01:50

       Right? A- and-

    4. SBSteven Bartlett2:01:51

       But now it's a global action problem, isn't it?

    5. NHNick Hanauer2:01:53

       It's a global, it's a global collective action problem, and if we want, if we want robust solutions to these problems, we're gonna have to robustly coordinate activity across the world. A- a- and you know, like, for-

    6. DPDaniel Priestley2:02:08

       Also we need-

    7. NHNick Hanauer2:02:08

       During the Biden administration, they tried really hard to do this globalprofit tax. We're, we're, uh... But that collapsed under the weight of pressure. But all, you know, again, all of your questions I think are really good, but they all point to the same fundamental weakness of, of, of governance

    8. DPDaniel Priestley2:02:24

       And Nick, you-

    9. NHNick Hanauer2:02:25

       You know

    10. DPDaniel Priestley2:02:25

        ... you, you need to talk to your billionaire mates and also say, "If we don't start investing in the economies that we do business with," which you are saying, right, of course, right? But essentially-

    11. NHNick Hanauer2:02:34

        I- it's a lonely business-

    12. DPDaniel Priestley2:02:35

        It, it's-

    13. NHNick Hanauer2:02:35

        ... I'll just tell you. [laughs]

    14. DPDaniel Priestley2:02:36

        But it, but it's like, it's like, it's like, with those CEOs of those companies, you, you, you know, you drain this, you drain the whole economy out and you, and, and-

    15. NHNick Hanauer2:02:44

        Yeah

    16. DPDaniel Priestley2:02:44

        ... then where, then what next? Like-

    17. SBSteven Bartlett2:02:46

        I think on this pass-through problem, I was thinking, I was looking at different ways that this ends up being applied. So if you think about the Big Mac, the Big Mac costs different things in different states depending on how much tax the ch- that that state charges. So in Oregon, the Big Mac is $8, whereas in Chicago it's almost $9. Um, if you think about, like, bookstores, you can buy one book on the high street for $20, the same book online is $10-

    18. DPDaniel Priestley2:03:07

        Yeah

    19. SBSteven Bartlett2:03:07

        ... because they're passing through the costs. So it's conceivable that if we, we say to big corporations, "Right, you guys are going to pay a, a bigger tax to sell into the U- UK than the UK consumer," that they'll, they might pass that on to the UK consumer, and they might look at different markets and... Because, you know, they might say as a company, "We wanna make 30% margins-

    20. DPDaniel Priestley2:03:25

        But also, also the UK consumer-

    21. SBSteven Bartlett2:03:26

        "... and the way to make 30% margins in the UK is to bump the cost"

    22. DPDaniel Priestley2:03:29

        ... UK consumer could say, "I'm gonna use a VPN and pretend that I'm gonna be in a-

    23. SBSteven Bartlett2:03:32

        Yeah

    24. DPDaniel Priestley2:03:32

        ... different market and pay a lower price."

    25. SBSteven Bartlett2:03:34

        Yeah.

    26. DPDaniel Priestley2:03:34

        And doesn't matter, you still have to pay the broadcast license if you wanna be available in our, in our country. These are hard problems, and we need to know who is the person that we're targeting. It's, it's the BlackRocks of the world, it's the, it's the big banks of the world, it's the big m- morg- like-

    27. SBSteven Bartlett2:03:50

        I had a, I was gonna say, I had a private conversation with the CTO of a very large company, technology business, and he was saying to me, he goes, "I, I don't think the UK understands the situation it's putting itself in, and, and the EU with all this regulation." He said to me, um, that, "We sell this particular product. It's a physical product. And because the UK, and I think EU, have put this new law in where you have to have removable batteries-

    28. DPDaniel Priestley2:04:16

        Mm.

    29. SBSteven Bartlett2:04:17

        ... interestingly, the unintended consequence of that is we have to stock more lithium batteries, more of them go into landfill-

    30. DPDaniel Priestley2:04:23

        Yeah
41. 2:09:40 – 2:15:31

    Radical Solutions To Inequality

    1. NHNick Hanauer2:09:40

       will sort it out."

    2. SBSteven Bartlett2:09:40

       Is there, like, a radical idea of how to solve this? Do, do we need, like, all the, the, the very, very rich people in the world to come together collectively and say, "We're gonna create a new model"? Like, how do, how do you... I don't know. Is there any radical ways to solve this stuff, or is it just all trade-offs once again?

    3. NHNick Hanauer2:09:56

       Well-

    4. DPDaniel Priestley2:09:56

       One of the-

    5. NHNick Hanauer2:09:56

       Democracy

    6. DPDaniel Priestley2:09:57

       ... one of the big radical ways is breaking up companies, and it's unthinkable.

    7. NHNick Hanauer2:10:00

       Yeah.

    8. DPDaniel Priestley2:10:00

       If I-

    9. NHNick Hanauer2:10:01

       This is, this is what TR did.

    10. DPDaniel Priestley2:10:02

        You know Jeff, you know Jeff Bezos, right?

    11. NHNick Hanauer2:10:03

        Yes, I do.

    12. DPDaniel Priestley2:10:04

        So-

    13. NHNick Hanauer2:10:04

        He was in my wedding

    14. DPDaniel Priestley2:10:05

        ... I wonder if he would lose more sleep about higher taxes or having his company broken up.

    15. NHNick Hanauer2:10:10

        Oh, for sure broken up.

    16. DPDaniel Priestley2:10:11

        Because if you broke up, uh, Google from YouTube, if you broke up AWS-

    17. NHNick Hanauer2:10:15

        Yeah

    18. DPDaniel Priestley2:10:15

        ... Amazon Prime, and Amazon-

    19. NHNick Hanauer2:10:17

        For sure

    20. DPDaniel Priestley2:10:17

        ... if you, like, the biggest thing that scares the billionaires is backing competition with the market.

    21. NHNick Hanauer2:10:23

        Yeah.

    22. DPDaniel Priestley2:10:23

        And it's like, oh, my goodness, I don't wanna have to compete. I've got this amazing monopoly that just-

    23. NHNick Hanauer2:10:26

        Yeah

    24. DPDaniel Priestley2:10:27

        ... works.

    25. NHNick Hanauer2:10:27

        100%.

    26. DPDaniel Priestley2:10:28

        Right? So-

    27. SBSteven Bartlett2:10:28

        But is, is that a perfect solution? 'Cause I was thinking you could-

    28. NHNick Hanauer2:10:30

        It's not a perfect solution.

    29. DPDaniel Priestley2:10:31

        It's a pretty good solution.

    30. NHNick Hanauer2:10:32

        It's the least worst solution available. [laughs]
42. 2:15:31 – 2:26:28

    How Do We Restore Hope?

    1. SBSteven Bartlett2:15:31

       We have a closing tradition where the last guest leaves a question for the next not knowing who they're leaving it for, and I think it's quite a relevant question. Um, I'll ask you first, Dan. The question is, in a world with so many challenges, what can we do to restore hope and trigger engagement?

    2. NHNick Hanauer2:15:47

       [laughs]

    3. DPDaniel Priestley2:15:47

       [laughs] Uh, uh, getting back to what we were talking about, we need, we need people to know that the ga- the rules of the game have changed, and that the rules that we grew up with, where we grew up in a particular industrialized, late stage industrialized world that had those rules, and we now live in an early stage digital revolution world. And the thing that gives me hope is I know how the rules of that world work, right? Someone explained it to me. They actually explained, "This is how you start a business. This is how you grow a business. This is how you make a million. This is how you hire some people. This is how you get a great team working side by side." That gave me an enormous amount of hope. I have a pathway out of where I was born and the wealth I was born with and where I am now. Someone explained to me the pathway, here's how the rules work, and here's how you make, make success. One of the things that makes people feel hopeless is that they're stuck in a game where no one explains the rules.

    4. SBSteven Bartlett2:16:41

       So explaining the rules.

    5. DPDaniel Priestley2:16:42

       So I would say we need a schooling system. The thing we don't talk about enough is that the schooling system has to explain to kids the relevant information as to how to function in the current economy.

    6. SBSteven Bartlett2:16:53

       So I played that forward in my head and I was thinking, okay, you get a million kids and you explain all of the rules to them. At some point, if you just give it a year or two, say they all knew the rules.

    7. DPDaniel Priestley2:17:01

       Mm-hmm.

    8. SBSteven Bartlett2:17:02

       Um, there's still an edge, and some of them would figure out the edge.

    9. DPDaniel Priestley2:17:06

       Totally.

    10. SBSteven Bartlett2:17:07

        And then you've got this pocket that know everyone knows the rules, but then others know this particular way-

    11. DPDaniel Priestley2:17:12

        Yeah

    12. SBSteven Bartlett2:17:13

        ... to beat the system, and that could be with, I don't know, they learn about AI, they learn about whatever, and then you're kind of back into the same place, and you were one such person-

    13. DPDaniel Priestley2:17:20

        Yeah

    14. SBSteven Bartlett2:17:21

        ... who got the edge. Someone came to you and went, "Psst, you know they're saying the rules of this? That's, actually there's a way to get an edge."

    15. DPDaniel Priestley2:17:28

        Yeah.

    16. SBSteven Bartlett2:17:28

        And you had it within you for whatever reason to capitalize on that edge.

    17. DPDaniel Priestley2:17:31

        Mm-hmm.

    18. SBSteven Bartlett2:17:32

        And now you're a multimillionaire.

    19. DPDaniel Priestley2:17:33

        Almost had that edge.

    20. SBSteven Bartlett2:17:34

        So, so th- there's always gonna be the ru- and then the rules get-

    21. DPDaniel Priestley2:17:37

        But there's no permanent-

    22. SBSteven Bartlett2:17:38

        ... instantly expire.

    23. DPDaniel Priestley2:17:38

        There's, there's no permanent state.

    24. SBSteven Bartlett2:17:39

        Actually, every single day after you explain the rules to someone-

    25. DPDaniel Priestley2:17:41

        Yeah

    26. SBSteven Bartlett2:17:41

        ... there's a new set of rules.

    27. DPDaniel Priestley2:17:42

        The only consistent is change, and at the moment, most people I encounter who've never had any explanation going on about how the world works now, they are hopeless. They feel completely hopeless. As in, like I see kids who are sending out, um, CVs to Microsoft or to like some major company. They don't realize that those companies are getting 3,500-

    28. SBSteven Bartlett2:18:06

        I get it

    29. DPDaniel Priestley2:18:06

        ... applications a week.

    30. SBSteven Bartlett2:18:07

        The day after you explain the rules to them, the rules are one day less relevant. And so it's true. You'd have to go to school every single day.

Episode duration: 2:32:26