Uncapped with Jack AltmanBalaji Srinivasan Breaking Down Modern Politics and Starting a New Country | Ep. 24
EVERY SPOKEN WORD
50 min read · 10,374 words- 0:00 – 0:19
Intro
- BSBalaji Srinivasan
So it's actually not two factions, left and right. It's four factions: the internet, Blue America, Red America, China. Blue America versus the internet is a tech lash. Blue America versus Red America is wokeness. Red America versus Blue America is Trump. Red America versus China is a trade war. [upbeat music]
- 0:19 – 1:24
The Network School
- JAJack Altman
Do you ever wonder what it's like to live in a startup society on an abandoned island? Well, let me show you. [grunting] This place is an oasis for gym rats and startup founders. I've been living in this real-life experiment called The Network School, ran by Balaji Srinivasan, where we're kind of testing what creating a new nation would feel like. This week, I had group workouts every morning. Sometimes I hit two-a-days because the energy here just makes it easy to stay dialed in. I led my first class to over forty people. I had to hit them with that Riz 101, and I'll share more about that later. I went to a few classes this week, and Balaji talks on AI and the future of tech. Took a field trip to the Super AI conference in Singapore, it's just an hour away, and I wrapped it all up with a fun-ass weekend-long sports tournament competing for a fancy genetics kit. Oh, and we get three healthy meals a day, plus hours of deep convos with insanely interesting people. It's gonna really hurt going back to real life, I'm not gonna lie. This place feels fake in the best way possible. I almost forgot that World War III started this week.
- JAJack Altman
All right, Balaji, I've been really looking forward to this. Thanks a bunch for doing this with me.
- BSBalaji Srinivasan
Awesome. Good to be here.
- 1:24 – 3:38
Mapping the political landscape
- JAJack Altman
So I want to start the conversation by just sort of getting your latest lay of the land of how you view, like, the political map. You know, whether it's sort of like the left, the right, uh, tech, crypto, America, other countries. Like, what is your latest mental map of the political field?
- BSBalaji Srinivasan
So I will reduce it to a few graphs, and then from that, derive a bunch of other things. So the first graph is one that shows the internet disrupting Blue American media, where Blue American media was sixty-seven billion dollars in revenue around the year two thousand, and it crashed to, like, sixteen, seventeen billion in revenue by around twenty ten, twenty eleven, twenty twelve, and then Google and Facebook rose, okay? So the internet disrupted blue media, and you know the saying, "Go woke, go broke." It was actually in reverse. It was, "Go broke, go woke." Brokeness preceded wokeness, where essentially, with media revenue cratering seventy-five percent, everybody had to have extreme message discipline to retain their jobs in US media, and they felt their pie shrinking. And they, uh, the tech guys who they had thought of as just another part of the Democrat Party, suddenly we were seemingly coming for all the marbles, starting in, you know, the, the two thousand and eight to twenty twelve window. And so the, the blues radicalized, and, uh, th- thus began both the tech lash and wokeness by about twenty thirteen. The other graph is China disrupting Red America by disrupting manufacturing, and China also flips Republicans and Red American manufacturing around the same time, around twenty ten. And so Red America's economically hurting. That leads to Trump, which is also a backlash against Blue American wokeness, and it leads to the trade war against China. So it's actually not two factions, left and right, it's four factions: the internet, Blue America, Red America, China. The internet versus-- Blue America versus the internet is a tech lash. Blue America versus Red America is wokeness. Red America versus Blue America is Trump. Red America versus China is a trade war. And all of that started heating up post-twenty thirteen after these twin disruptions, with a reaction by both blues and reds to try to regain the ground that they had lost, and they were fighting each other, but they're also fighting out of the
- 3:38 – 6:19
Tech and the media
- BSBalaji Srinivasan
plane. Now, what happened was tech, as, as we know, 'cause we were in the middle of that, was just completely taken aback, most people, by the tech lash. I gave a talk on it in twenty thirteen, where I put two and two together, and I can match to historical trends, which I'll talk about in a second. But I could see that we needed what I called Silicon Valley's ultimate exit, right? Which is a play on words, right? Exit is obviously like, you know, exiting a company and-
- JAJack Altman
Trying for exit, yeah.
- BSBalaji Srinivasan
But it's also leaving, right? And it is, uh, it's also in a sense of Mars. It's in a sense of the frontier and transcendence, you know, leaving to get to the next thing, right? Exodus, okay? So it's several different meanings of that. And so the ultimate exit is not simply like making another billion. It is, uh, you know, n- it's a, it's a country of a million people. It's not a company of a billion dollars. We've done that. That's, that's old news. How many unicorns do you and I have in our portfolio? I've lost count. You probably have, too, [chuckles] okay, at this point, right? And so the, um... I'm not saying that to brag or whatever. I'm just saying, like, that's now in our rearview mirror. That's, like, a known kind of thing. Another billion-dollar fund doesn't mean anything. What we're gonna need is actually, uh, our own, our own jurisdictions, okay? And I'll come to it in a second. So I could see that coming in twenty thirteen, and we were taken aback. Most people in tech were taken aback by the tech lash because everybody thought of themselves as Democrats. "Why do the Democrats suddenly hate us so much," right? And that went on for years and years and years. And then finally, in twenty nineteen, twenty twenty, after, you know, people at Facebook realized, wait a second, the, the journalists don't want, like, some edit, like a feature edit. It's not like, "Oh, change this policy, we'll be happy." They just wanted to kill Facebook, right? Like, "Should Facebook exist?" was a common meme at the time, right? They're trying to, just trying to kill it, and they're trying to kill every tech company. They're trying to kill-- obviously, they almost killed Uber. They went after people low and high, from somebody saying that they're, you know, that, that they were against, you know, homeless encampments on the sidewalks to, you know, somebody making an off-color joke as an executive, to everything in between. Everybody was, was attacked, right?... and that, you know, peaked with the BLM riots of, of mid twenty twenty. And then after that, essentially tech managed to rally, and by twenty twenty-two came together, and then Elon and the forty-four billion and X takeover, and that was like X Day, like D-Day, you know? Like, all the forces were just aligned behind X, all the centrist, center right, center left people, and then all our remaining forces, kaboom, like this, opened a beachhead. And then, you know, YouTube uncensored and Facebook uncensored and so on and so forth. Then from that beachhead came, you know, essentially X marks the-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... spot. Okay, fine. So after twenty twenty-two, tech dialed it in, counterpunched.
- 6:19 – 11:32
China and the trade war
- BSBalaji Srinivasan
The same thing, actually, less visible to Americans, happened with China. You see, China was also completely taken aback by the trade war in twenty sixteen. China thought the Republicans liked it. After all, so many Republicans had been involved in manufacturing and sending things to China. Republican businessmen basically thought that Chinese, you know, basically worked hard for a low wage and so on and so forth. And Chinese FDI was actually spiking into the US like this, and then went completely in reverse after the Trump administration. That's one of the few graphs which you can see that's a total reversal graph. The other one that's like that is the curve for oil discoveries. Like, I think it's a Hubbert curve, and it looks like a bell curve, and then fracking happens, and it goes totally in reverse. Once in a while, a curve goes totally in reverse, okay? So Chinese FDI was spiking into the US, and then it just completely crashed after Trump took over and the trade war began in earnest, and we didn't see that so much in the US, but it was a huge deal in China. All kinds of things were blown up. I mean, Meng Wanzhou, J-- I'm, I'm probably mispronouncing that, but do you know who that is?
- JAJack Altman
Mm-mm.
- BSBalaji Srinivasan
That was the, um, very senior, uh, I think the CFO of, um, of Huawei, was just snatched off a plane in Canada, okay, and just held for years. And it was on some pretense or whatever, and then the Chinese were like: "Okay, you're gonna do that." Then they snatched two Canadians, and they held them as, like, kind of a ransom to get the Huawei CFO back, okay? Because it was, of course, political. It wasn't, like, a commercial thing, really, right? It was like Huawei was selling something to Iran, but it was like a Chinese company that was being sanctioned by an American in Canada for selling something to Iran. The question is, who has sovereignty over who, okay? Right, fine. Anyway, point is, the trade war was actually a huge deal in China, and for the first whatever number of years here, was kind of taken aback by it, and they were thinking they could negotiate. And eventually they realized: Oh, we just need to diversify all of our revenue streams away from the US. So now the US became sub fifteen percent of their revenue, and most of the revenue, they just built up other markets in the Global South and so on. And then after the pandemic, what many Americans don't realize is they just completely just dialed it in, turned it up. They went vertical on cars, they went vertical on solar, they went vertical on ships, vertical on everything, military, everything. They've just absolutely turned on the afterburners, and they're just far ahead in the physical world. There's just no contest, unfortunately. I'm just-- I'm a reality shill, I'm not a China shill. In fact, I think in many ways, all the people who have cope on China are the stealth on the Chinese stealth bomber.
- JAJack Altman
Say more about that.
- BSBalaji Srinivasan
Meaning they're covering up what China actually is.
- JAJack Altman
Like, by basically being so, uh, you know, aggressively opposed, it's like not understanding your competition accurately, that kind of thing?
- BSBalaji Srinivasan
Yeah, exactly. They're the stealth on the Chinese stealth bomber. The fact that they're covering up what China actually is and saying, "It's weak, it's weak, it's gonna go to zero. It's nothing. Don't worry about it. Why are you talking up China?" You know, like, because they're the role most-
- JAJack Altman
Do you like saying: "My competition is terrible," instead of actually, you know, accurately understanding what they can do?
- BSBalaji Srinivasan
Exactly. That's right. And so, I mean, so, I mean, the US, during the Cold War, took the Soviets incredibly seriously. It's better to overestimate the enemy or the competition or whatever you want to call it, than underestimate them, you know? Uh, part of it is the Soviets had actually fought in World War II, so Americans respect military strength, and the Chinese had just been grinding in sweatshops, and lots of Americans haven't been to China. You know, my prescription, by the way, for any American, any Westerner, there's, like, six or seven cities. If you haven't been to them in the last three years, your worldview... If you, you've been to all of them, your worldview, I think, will be correctly calibrated. I'd say Dubai, Riyadh, Bangalore, uh, Ho Chi Minh City, Singapore, Shenzhen, and then maybe throw in a few more Chinese cities. Actually, you know what? You should also go to some Tier Three Chinese city, like the number fifty Chinese city, not even like Chengdu or something like that, like-
- JAJack Altman
Just to see what, how impressive even that is?
- BSBalaji Srinivasan
Yes, exactly. It's more impressive than just about any American city, j-- to be, to be completely honest, right? And, and yet their prices... Like, one of the things that's happened is they have sandbagged their currency, and they've sandbagged. They-- Like, it suited Americans to pretend that they were still strong, and it suited the Chinese to pretend they were still weak. And so there is something-- It's kind of like, you know, a start-up wants to, even when it's growing and it's become pretty big, it wants to still pretend it's, like, a revolutionary.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
And like an incumbent, even if it's losing share, wants to pretend it's still in charge.
- JAJack Altman
Right.
- BSBalaji Srinivasan
You know, and that, that illusion continues for a long, long time, 'cause, uh, both parties would be demoralized if the truth was acknowledged-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... because the incumbent is based on being a big dog, we're Adobe or whatever, and the, the start-up is based on revolution, not on being, you know-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... the incumbent, right? So that's what's basically happened. So anyway, so you put that together, and here's the issue. The issue is, those curves aren't slowing down. Now that the internet has plowed through the resistance of Blue America, all media and all money is gonna become the internet, 'cause all media is AI and social, and all money is crypto and Bitcoin and smart contracts and so on and so forth. And similarly, China has plowed through the resistance, and all manufacturing is robots, and all the military is drones. And those are Chinese drones and Chinese robots because I love my American friends who are working on re-industrialize and so on and so forth, but
- 11:32 – 24:30
Tariffs and economic strategy
- BSBalaji Srinivasan
the tariff thing is an acknowledgement that an American product is not price competitive in a neutral market like Uruguay.... right? Or Austria. If they have an American and a Chinese product on the shelves, the Chinese product is cheaper at comparable quality. I mean, look, Elon's our best guy, and BYD is competitive with and outselling Tesla in many foreign markets. He's our best guy, right? Lots of other hardware products are not even in the running, and so they're trying to protect the home American market. The same thing is happening with the journals, by the way. Just like Red America is trying to protect the home American market rather than actually playing to win, 'cause they're getting killed by Chinese competition abroad, Blue America is trying to protect their home market of the journal-- This is happening less publicly, but lots of media corporations have unions that are trying to prevent AI from entering.
- JAJack Altman
Mm.
- BSBalaji Srinivasan
Right? They're trying to freeze the current moment in amber.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
And, and, and of course, they're gonna get disrupted by new entrants that just u- use AI in a, not a slop way necessarily, but in a, in a proper way, right? Um-
- JAJack Altman
Are you saying tariffs are necessarily a bad strategy, or you're just saying that it's a reflection of these market dynamics?
- BSBalaji Srinivasan
Tariffs are a bad strategy when they're used in a, in a stupid way, right? Lots of things are tools, right? Like, think about a surgeon. The surgeon has tools. They've got a scalpel, right? They've got forceps. They've got all these tools there, okay? And you need to use the right tool for the right job at the right time, in the right order, and a tariff is a tool. But like, imagine if you did a surgery with just, like, a mallet. You know what I mean? It's... You know, you need that at some points, you know, forceps or, you know, like... But you have to use them in the right-- It's like an orchestra, right? It's an orchestration. And the problem is, there's absolutely-- Because policy is literally set by Twitter, it-- everything is just stupid sloganeering, where, to be specific, right, what is a tariff? A tariff is a tax, okay? A tariff is a tax that says, rather than, you know, i- if you buy this thing abroad and you import it, then you have to pay ten or twenty or thirty or forty-nine percent more or whatever on it. The issue is, modern supply chains have a part coming across the border, then you do something with it, you send it back, you do something with it. Like, you look at auto supply chains, they cross the borders, like, six times, okay? Many of those crosses were assumed to have zero tariff, and now suddenly they have forty-nine percent. So it's as if you put, like, just-- it just destroyed all, any supply chain that crosses American borders multiple times, number one. Number two is these tariffs were placed on raw materials, like imports of, you know, of, of steel, imports of, um, you know, minerals that aren't as frequent in the US, okay? They were placed on machine tools, which are the things that you actually need to go and, quote, "reindustrialize," right? They were just pl- they were placed on Swiss chocolate. They were placed on French wine and Canadian maple syrup. They were placed on Vietnamese shoes after telling Southeast Asia that, that we needed them as a bulwark against China. And they placed higher tariffs on India than they did on China. And, and, and, and there's so many retarded things about this, okay? Where fundamentally, what many people don't realize is you could actually have an even worse... Like, Biden's foreign policy was hot war with Russia, cold war with China, cold civil war with Republicans, and with, with tech, okay? While also alienating Israel, India, and so on and so forth, right? So basically, uh, A, they're tariffing allies. B, they're tariffing raw materials. C, they're tariffing, uh, machine tools.
- JAJack Altman
Mm.
- BSBalaji Srinivasan
D, they're putting remaining American facture- m- manufacturers out of business, okay? Why? Because if, like, your cost structure, you have a spreadsheet of, you know, a bill of materials, like, for how you're building something, and, like, this, this supply chain that you optimized carefully with deals crafted over years, okay? Where you're just eking out a seventeen percent margin on something that still happens to be made in America, and suddenly, like, four of the parts hit forty-nine percent tariffs, you might immediately become unprofitable, okay? And no, it's not possible to necessarily just take that out of the supply. That's a whole negotiation as to who pays for what and, and so on and so forth, right? Like, that's something which is... It is, it is something which immediately causes conflict between the buyer and the seller. Who's, who's gonna come out of whose hide? Maybe both parties go out of business 'cause, you know, the c- the end customer can't take it, okay? So it's just a tax. And by the way, none of the American, uh, manufacturers asked for this. They were all hit by surprise by that. It's like, "Hey, I'm gonna help you with this giant surprise tax." And by the way, they couldn't even, like, pay the tax a year from now. They've got a surprise tax where suddenly they have to go to the port, and on a, a million-dollar import, they have to pay, like, three hundred and ninety thousand dollars cash on a thirty-nine percent tariff right then and there, or their shipment is impounded, which they often don't have the cash. So they have to go into debt, they have to fire somebody. Complete disaster. And the way of thinking about it is, imagine I increased the price of your iPhone forty percent. I just gave you an incentive to build Apple. Why aren't you building Apple in America, huh? Obviously, all you wanted was some maple syrup, and they're trying to make you make a maple tree farm.
- JAJack Altman
Mm-hmm. Yeah.
- BSBalaji Srinivasan
It was an incentive, but it wasn't a correctly calculated one in the right place at the right time.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
Like, yeah, you're paying more for Apple. Are you gonna go found Apple? No, right? And now, there's actually correct ways of doing this. For example, Sematech, in the '80s, went and looked at the specific things that were strategically important, like Japanese semiconductors, and they found, "Okay, here's, like, the thirty customers of this foreign company. Let's get them all together, form an industry consortium, invest in a domestic competitor, build that up over time, and now we've got a second supplier alternative to the foreign vendor." But it takes time to make a new company, right? It's hard to do that. You know how hard it is. I know how hard that is. It doesn't-- You can't just tariff it into, into, you know, right? And really, the thing that they should have done, the, the door that they didn't take, is reduce regulations.
- JAJack Altman
Right.
- BSBalaji Srinivasan
Rather than attacking the entire world, you just reduce costs for American manufacturers. Costs you nothing.... costs you absolutely nothing.
- JAJack Altman
I'm sure there are a bunch of places where the tariffs were very important, and like, you know, it was kind of like used everywhere. So you probably figure it was randomly used correctly and randomly used incorrectly, since it was so-
- BSBalaji Srinivasan
I would say it's ninety-nine point nine percent used incorrectly. It was like-
- JAJack Altman
But basically, you're saying the places to use it correctly are if there's like a series-
- BSBalaji Srinivasan
Very strategic areas. Yeah.
- JAJack Altman
Like a foreign, and, you know, like a, like a national interest that's dominated by some foreign country.
- BSBalaji Srinivasan
Yes. Like, if it was just... See, the thing is, also, they're completely schizophrenic, where they're tariffing Vietnam, and India, and Canada, and France, and then saying: "Oh, but we're actually really going after China." That's like a gangster, like firing into-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... a crowd to get his enemy.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
And then telling them, "Don't worry about the bullets in your back. I'm trying to get that guy."
- JAJack Altman
It's definitely not what you expect from, like, nation-states, at least.
- BSBalaji Srinivasan
It's certainly not the hub of the global economy, right? Which is ostensibly... Like, the, now, this gets to a deeper point, which is the only reason-- What is the US actually doing, by the way, with all these imports? Like, the reason that Trump is doing this is he's seeing, correctly, that on some level, it's an unsustainable trade deficit, okay? Where the US, it looks at first, the US just keeps, you know, ah, ba- basically importing goods and paying for them, and, and the national debt keeps growing. But what's also happening is the US is able to print the money, right? So wait, what's actually happening? Vietnam sends shoes, and the US prints the money and gives these new database entries to Vietnam, and then Vietnam goes buy it back and buys US Treasury. So in a real sense, Vietnam is, like, giving the shoes as tribute to the US, for free, in a sense. Why? Because the US used to, the left used to basically have, um, the diplomatic agreements to run the global economy, and the right provide the military force in exigent circumstances. And by the way, when the diplomats were working, the American Empire was the greatest empire of all time. We should all pay respects. You know how hard it is to get a hundred and ninety people to sign something on a cap table? It's pretty hard, right? You've probably done it. I've done it. Imagine getting a hundred and ninety countries to sign an agreement.
- JAJack Altman
Really hard.
- BSBalaji Srinivasan
Really hard! So the infrastructure, the international order, the rules-based order that American diplomats built was genuinely the greatest achievement diplomatically in world history. And the military force, of course, was important, but it was a secondary thing to that web of agreements, all those trade agreements. And all of that stuff, by the way, American Empire, was set up for the benefit of America. That's why there's a McDonald's everywhere, a Starbucks everywhere. That's why Hollywood movies are everywhere. That's why there's seven hundred and fifty US military bases around the world and aircraft carriers in every port. That's why you have, um, as you know, many, many heads of state, by the way, are trained in America. Have you seen, like, the Kennedy School of Government at Harvard alone? Like, their list of all their alumni has, like, twenty heads of state at, like-
- JAJack Altman
Yeah
- 24:30 – 27:41
Global economic shifts
- BSBalaji Srinivasan
several things are happening at the same time. So first is, by tariffing all these countries, they're giving an unmistakable signal to the whole world. See, normally, when there's some economic issue, it's very hazy as to what caused it. Like, why are your healthcare premiums high? Someone could blame Obamacare, maybe they're not. It's, like, hard to tease out. It's multifactorial. But for a hundred and ninety countries, they all got a tweet on the same day at the same time telling them that the reason that their most pro-American companies in each country were going out of business or radically impaired is because these tariffs were imposed. And by the way, just to explain that point, any company in Vietnam, in Thailand, in, in Hungary, whatever, right, Morocco, that's, like, exporting to the US, the guys who are doing that are the most pro-American people in that country. They speak English. They have American partners on that side. They have vendors, suppliers. They probably studied in America or they have people there. They are the people who normally are lobbying their country to maintain good relations and good trade relations with America. Every single guy like that just got completely wrecked in every country around the world simultaneously. When I mean wrecked, I mean, like, bankrupted, certainly humiliated. Anybody who invested in America, trusted America, just got rocked. And what does that do? That means the faction within every country that said, "Hey, we should trade with China instead," got radically strengthened as a consequence. For example, in Taiwan, there's a guy in Taiwan called Jim Bost. He's like the Joe Rogan of Taiwan. He used to be super pro-independence. Now, he wants Chinese reunification. Taiwanese influencers are completely flipped because they saw essentially the US kind of... W- some people say they half-assed it on Ukraine. Some should say- will say they should never have gone to war in Ukraine. Some will say they should never have pulled out. Fine, whatever it is, the US is not winning the war in Ukraine, and Taiwan doesn't wanna become, become like Ukraine, like a crumpled-up tin can to use against China, and they don't think the US will back them, number one. And number two is, China's actually pretty nice right now for many of them, and Chi- China's also doing something called, they, they issue something called the Taiwan Compatriots Card. Do you know what that is?
- JAJack Altman
No.
- BSBalaji Srinivasan
Basically, they wanna do a peaceful reunification with Ch- with Taiwan. So every Taiwanese citizen can get a card that basically makes them a de facto Chinese citizen. So they're on... 'Cause what does it mean to make someone to reunify the island? It means they're all Chinese citizens. So what if you could get fifty, sixty, seventy percent of them? 'Cause there's huge advantages if you're a Taiwanese person to do business on the mainland, which is, like, thirty times bigger, right? Or something like that. So it's a much bigger economy. You can live there. You can travel back and forth. What's not to like? So for the apolitical person, it's like you're living in Hawaii. Why wouldn't you want to travel to the US mainland, right? So the Taiwan Compatriots Card is this controversial issue within Taiwan, but it's so useful to the Taiwanese people that China's all- China, I remember they speak, they speak Chinese, right? They understand Taiwan. They, they're, they're doing a lot more than simply just, like, invading the island. They have, like, five million spies in there. You know, all kinds of stuff is happening there. So TLDR, the economic world war that the trade war is on the world, just like the wokes... M- Remember, the wokes ostensibly were for brown people, and they're for Jewish people, and Black people, and women, and gay people, and blah, blah, this, that, and the other. They were supposedly for everybody.
- 27:41 – 31:11
Rise of the global anti-woke coalition
- BSBalaji Srinivasan
But in practice, intersectionality turned everybody into an oppressor. You know why?
- JAJack Altman
Well, I have a... Well, I wanna hear from you.
- BSBalaji Srinivasan
Let's say, let's say you're Jewish, but you're also a white man, and you're rich, so therefore-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... you're an oppressor on that axis, right? And this guy, he might be Indian, but he's rich, and he's, you know, a man, so he's an oppressor on that axis, right? So they could just selectively emphasize-
- JAJack Altman
You're basically whatever your most oppressive attribute is.
- BSBalaji Srinivasan
Exactly, and everybody... So, for example, white women were victims during Me Too, and two years later, they were the oppressors during Karen, as Karens. So twenty eighteen, they're the victims in Me Too, when it was useful. Then twenty twenty, they're the oppressors as Karen. The same woman is not treated sympathetically. So, um, and, you know, the, the, the point is that they will just take your oppressor axis and stress that, and the thing is, everybody is either... When you do an or function, you know, like or-
- JAJack Altman
Mm-hmm
- BSBalaji Srinivasan
... like, like-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... either the probabilistic or the computer science version, you do the set theoretic or, for example, everybody's either white or male or straight or cis or successful or, or... Like, when you do the or function, n- that's, like, everybody's an oppressor.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
Ninety-nine point nine percent of the world is an oppressor, unless you've got every single intersectional bingo, okay? So this is similar to what the Soviet Union did, where it promised the workers paradise but actually delivered the gulag, right? The difference is communism promised the working class better economics and delivered them worse economics. Wokeness promises the wokest class higher status. Like, now everyone will respect you, right? And it actually, o- once they buy into the premises of wokeness, they can be canceled at any time because they're also an oppressor on all these other axes that they're not thinking about at that moment. By buying into wokeness, it's a devil's bargain, where in the short run, they can yell at you that you're mansplaining, but then, three months later, that white woman is checked from the side. She's got white privilege. Oh, boom! You know, knocked out of the box. Okay, so intersectionality turns us all into oppressors, and so what wokeness did is it created the global anti-woke coalition. Wonderful. Great. Okay, the problem is, what MAGA's done, unfortunately-... is they've created the global post-American coalition. This is what people are calling, outside the US, World Minus One. Everybody wants to trade with the US. US doesn't want to trade with everybody. So what are they gonna do? Well, they're not gonna wage trade war with each other. They're just gonna do World Minus One, and so they're redirecting trade flows. And what people are not seeing is China went, and like all of these guys, it was just the most amazing, crazy thing, okay? Actually, both China and India have done this. I'm happier that India has done this. But, like, right after Trump announced his trade war, all of these guys who were on the fence, like, you know, in Southeast Asia and so on, they, like, started lighting up the towers in, like, Chinese colors, and they did state dinners for Xi, and they just start, started signing... China just went and ran the table on all these, like, swing states because they just got told F you by the US-
- JAJack Altman
Right
- BSBalaji Srinivasan
... who said they don't need them, right? And then, you know, obviously India got pushed into the BRICS column, in part more into the BRICS column by, uh, by, by, by this, you know, trade war.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
And so they did deals with Europe, and they did deals with China, did deals with Russia, did deals with all ki- every country other than the US, India's just signed deals with or done- got on stage with, right? So World Minus One is a very bad place for the US to be, because... So that's, like, diplomatic isolation, okay? We talked about the economics, right, the dollar. We talked about diplomatic. Go ahead. You're gonna
- 31:11 – 37:18
Unholy alliances that might form
- BSBalaji Srinivasan
say something.
- JAJack Altman
I just wanted to round out sort of this political map with, uh, like, you started with kind of, you know, there's, like, these two twin battles. You know, there's, like, sort of like, uh, let's say, like, woke, sort of, um, media, academia, just, like, state stuff and tech. And then you've kind of got, like, China and the right. And then I guess what I'm curious about is the other, uh, sort of like the cross angles. And basically what I'm trying to get to is, like, what are the, what are the natural alliances or unholy alliances maybe that are gonna form? And so, like, you know, it's like obviously it's n- it's not like, it's not like media and academia love the right, and it's not like China and tech are naturally sort of like simpatico.
- BSBalaji Srinivasan
Exactly. It's a four-way clash.
- JAJack Altman
You put out a good tweet about how, like, China, you know, is sort of like state above capital, and tech is naturally capital above state. Like, there-
- BSBalaji Srinivasan
Yeah, yeah, yeah, yeah.
- JAJack Altman
So like, what are the other directions here?
- BSBalaji Srinivasan
Other directions.
- JAJack Altman
Just to round it out.
- BSBalaji Srinivasan
Ex- excellent question. So my view is the successors to American empire are China and the internet, in the same way that the successors to Europe, Europe were American cap... Like, Europe was the center of the world in the nineteen hundreds.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
You know, like the UK and France and Germany, and the barbarians were the Americans and Russians on either side. And then it involuted and collapsed, and then basically got split down the middle between American capitalism and Russian communism.
- JAJack Altman
Are you saying those are the would-be successors, or you're thinking that that will actually happen?
- BSBalaji Srinivasan
It's already happened. It just hasn't been priced in. Like media, for example, already, NYT and so on get much less engagement than social media, right? Like, the SEC, Gensler, and so on, has been beaten. Crypto is, by some measures, the number four stock exchange globally, but it's very quickly becoming... Like, Hyperliquid alone does more revenue than Nasdaq with, like, eleven people, right? Internet capital markets are here. The internet has already taken over media and money, and China's already taken over manufacturing and military. That just hasn't been, like, priced in by everybody. One other thing that's happening potentially is this new national defense strategy is coming out, which is supposedly, we'll see what actually happens, but it's reportedly going to have the US essentially pulling back from Asia to focus on the Western Hemisphere and the issues at home. That is essentially the... Look, Hegseth and these guys are actually, they're not dumb people. Uh, you know, if you see Hegseth on podcasts before, on the Sean Ryan podcast, he said Chinese hypersonics can sink every US aircraft carrier.
- JAJack Altman
And if fifteen hypersonic missiles can take out our ten aircraft carriers in the first twenty minutes of a conflict, what does that look like?
- BSBalaji Srinivasan
You saw actually, the previous Secretary of the Navy, Carlos Del Toro, admitted one Chinese shipyard can generate more ships than the entire US Navy combined. The CEO of Raytheon said, "You can't decouple from China because it's, like, too important to the US economy." The relationship with China, we have to find a way to get along. There is a codependency. There's graph after graph, chart af- I mean, the US military is made in China. There's a study by Govini, which is a US military Pentagon-commissioned study, four hundred million dollars, and it shows, like, the Tomahawk and JDAM, their supplier, supplier are in China. That's already happened. The internet and China are already the successors. So what's going to happen? In my view, we're gonna see the third configuration. You asked about an unholy alliance. So we saw in the twenty tens, blue and tech, blue sort of forced tech, but there were some guys in tech who were sympathetic to blue as well. Blue and tech against red to, like, censor, deplatform, purge, and so on and so forth. Then in twenty twenties, we've just seen red and tech against blue, where the libertarians in tech sided with the conservatives, and that's Elon and, and, you know, X and, and Sachs, and so on and so forth. But we're going to see the third configuration, which is blue and red against tech-
- JAJack Altman
Hmm
- BSBalaji Srinivasan
... because the blues hate the capitalists, and the reds hate the immigrants. And by the way, a lot of the center now hates the phones, and they're blaming, with some justification, and I'll get to this, the internet for everything that's bad. What they're remembering is we had a good life thirty years ago.
- JAJack Altman
The nineties were good. We didn't have all this internet. We didn't have social media polluting everything.
- BSBalaji Srinivasan
Yeah, this internet thing ruined everything. They, uh, they are, they are taking that correlation, they're calling it causation, and there is some truth to that. But I think the important counterfactual is that for billions of people on the other side of the world, the internet resulted in the greatest and highest standard of living they've ever had. Like in India, the internet has radically increased, you know, the, the, um, incomes, and so on and so forth. Southeast Asia, in Dubai, in Riyadh, in China, certainly for billions of people, you know, actually, in Russia, Eastern Europe, right? So Eastern Europe, Russia, India, China, to some extent, Brazil, you know, Dubai, Riyadh, Southeast Asia, the internet is good on balance. And the reason for that, crucially, is they're okay with a moderated internet.
- JAJack Altman
When you say blue and red versus tech, you really mean tech versus-... everybody else.
- BSBalaji Srinivasan
There's a great book by a woman named Amy Chua. She's actually the tiger mother, okay? It's called World on Fire. It was written in two thousand and three, way before the current time. And she points out that there's something called a market dominant minority. That's when there's this-- When you have capitalism and democracy together, but there's a small group, identifiable, that wins very publicly in the market, then the group that wins the election starts to hate the group that wins in the market. Those are, for example, the Jews in Germany, whites in South Africa, Indians in Uganda, okay, um, overseas Chinese in Southeast Asia. These are people who are visible and who are winning in the market, and there's angry sentiment on their side. And she points out there's a review by Yale Review of Books, I think, that, that talks about this. And it says that the backlash takes three forms, okay? First, is a backlash by the majority against the wealth of the market dominant minority using the democratic process. Then there's a backlash of the market dominant minority against that initial thing, essentially, with forces sympathetic to the market dominant minority pushing back. Finally, there's a third reaction, where the frustrated majority that can't win either in elections or in the market, just starts to get really insanely violent, perhaps genocidal, okay? Now, all of her examples involve a race, okay, an ethnic group. However, most
- 37:18 – 41:21
Class warfare instead of race warfare
- BSBalaji Srinivasan
of the violence in the twentieth century was actually not on the basis of race. You know what it was on the basis of? See, it's funny, I put that as a blank, but it's, it's always, it's always interesting to me that, and I'm not saying this as an attack or ... Many educated people cannot answer that question, what I just posed.
- JAJack Altman
What most of the violence in the twentieth century was based on?
- BSBalaji Srinivasan
It's class.
- JAJack Altman
Hmm.
- BSBalaji Srinivasan
Communism was class warfare, and Kulaks were liquidated as a class. In Cambodia, the guys with glasses were just liquidated as a class. In China, the landowners, anybody who's considered rich, you know, the Kulak had, like, two cows, so he was like a super rich peasant. So, you know, Lenin's hang order, "Hang the Kulaks," right? Kill the rich man. Rich by, rich by some very modest definition of rich, okay? The enterprising small businessman was hung, quartered, murdered, okay? Envy is a very powerful force.
- JAJack Altman
If I had to have answered, I guess I would have, I guess, incorrectly answered something like, um, like sort of like a political philosophy or something.
- BSBalaji Srinivasan
That is more balanced. What happens is the guys who are being attacked build a political coalition to try and get to fifty-fifty the other way, right? But if it's an actual massacre, then it's like when they're totally outnumbered, okay? So the issue is, tech isn't a race, but you know what tech is?
- JAJack Altman
Hmm.
- BSBalaji Srinivasan
Tech is a class.
- JAJack Altman
Class. It is also kind of a political philosophy in some ways.
- BSBalaji Srinivasan
It's kind of a political philosophy.
- JAJack Altman
To like, to the clip you posted on X, which I, I wanna-- I'll link to, 'cause I think it was really good sort of highlighting... Like, when I watched that, it sort of highlighted something about, like, the America-China thing that I don't think I had fully, uh, internalized. But I do also think that, like, tech does stand for, like, capitalism, and some people kinda hate that.
- BSBalaji Srinivasan
Yes. Oh, absolutely. Well, that's the thing. Well, you got it. Last century, what was a lot of the yelling about? Capitalists. This century, what's the yell-- a lot of the yelling gonna be about? Technologists. But we are about techno-capitalism. Last century, the capitalism was front page, the technology was kind of a little bit in the background. Here, it's the technology that's front page, and the capitalism that's a little bit in the background.
- JAJack Altman
Do you think people are mad about the technology more than about, like, the accrued wealth and power?
- BSBalaji Srinivasan
Yes, because they're blaming AI for making everything fake, and they're blaming social media for radicalizing people. The blues blame it for radicalizing people to the right, the reds blame it for radicalizing people to the left.
- JAJack Altman
We'll probably blame crypto for, like, de, you know, legitimizing, like, governments or something.
- BSBalaji Srinivasan
Once... Yeah, well, once, once Bitcoin wins, once Bitcoin hits a million bucks, and, like, governments need to actually have Bitcoin to survive, which is going to happen, a lot of people are gonna be very mad at Bitcoin. Very mad, right? Because it basically, all kinds of welfare, all kinds of, you know, redistribution, stuff that would... W- the issue is, what would, what would have happened in the absence of Bitcoin is everybody would have been diluted and gone to zero. In the presence of Bitcoin, some fraction of people can get to lifeboats, can get to parachutes. That's what Bitcoin is. It's a lifeboat, it's a parachute. It didn't crash the plane. The money printing was happening beforehand, but it did allow some people to get away. The fact that some people are getting away, their relative wealth will be bid up. Like, with the next ten X of Bitcoin, all fiat billionaires get diluted down. Every USD holder gets diluted down, and, you know, somewhere between a hundred thousand and a million dollars per Bitcoin, wealth becomes cryptocurrency. Let's say most billionaires become crypto, most fortunes become crypto. The fiat world gets diluted down. It's a very deep point, right? One more doubling of gold, for example, gold is at twenty-one percent of global reserves, dollars at, like, forty-two. So even, like, another fifty percent increase, somewhere, somewhere between fifty to a hundred percent, gold will flip USD. So gold and digital gold, gold is flipping USD as the reserve currency of states, and Bitcoin is flipping as reserve currency on the network. To pull it back, people are gonna be mad at the tech guys. Why? Because they're gonna blame AI for taking all the jobs and crypto for taking all the money, and tech guys will take all the blame. Plus, guess what? We're Jewish and Indian, gay, immigrant, right, to the right, but to the left, we're white, male, capitalist, okay? Can't win. Cannot win.
- JAJack Altman
So how's it go, then?
- BSBalaji Srinivasan
Here's, here's what I would say: Every
- 41:21 – 46:56
The answer may not be in America
- BSBalaji Srinivasan
American ethnic group, other than the African Americans and Native Americans, left behind war, conflict, ethnic cleansing, murders, et cetera, in their home country to go far away. For example, the Pilgrims, right, they left... Like, a huge thing of America was leaving the wars of Europe, right? They were emigrants. It's not just a nation of immigrants, a nation of emigrants, E-M-I-G-R-A-N-T-S, right? The Roundheads and the Cavaliers-... v- left at various points, different sides of the English Civil War. Germans of e- rev, left the revolutions of 1848. The Irish left the Irish Potato Famine. You might know that story, right? There's more Irish abroad than there are Irish at home. Did they betray Ireland by becoming Irish Americans? Did they cut and run? Were they unpatriotic tax evaders by leaving Ireland when Ireland was chaotic and they didn't... You know, they had the first-mover advantage. They understood that their home country had nothing for them in any reasonable timeframe under their circumstances, so they did actually something that was bold and courageous, and they picked up and moved. They made a move, bold move, right? Why are the, why are there so many smart Iranians, Persians in America? Because of the Iranian Revolution. Why are there so many smart Chinese people, so many smart Koreans, so many smart Vietnamese? Because of the communist revolutions in those countries. Why are there so many smart Indians? Because India was socialist, and, you know, Indira Gandhi, like, declared emer... Most people don't know this. Indira Gandhi, like, declared emergency in the '70s, and, like, there's a lot of persecution of various kinds of Indians of different groups. So a lot of them left, right? And they, they were getting crushed under socialism, so they got out. Why is Elon in the US? Well, it wasn't a great place to be white in South Africa, you know, in many ways.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
How, why are there so many Russians after the end of the Soviet Union, right? So all of these countries experienced meltdowns, and the smartest and most resourceful and the boldest, and the ones who made a move, came to America, and that goes all the way back to the 1600s and 1700s.
- JAJack Altman
But don't you feel like then we still have all of that talent? They're still building companies in America, and so America should still endure?
- BSBalaji Srinivasan
They're not building companies in America. They're building companies on the internet, and this is the key thing. If you look at the S&P, it's the S&P 493 and the Magnificent Seven. You've seen that before, right?
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
That graph.
- JAJack Altman
Absolutely. Yeah, yeah.
- BSBalaji Srinivasan
So all the capital is going towards either internet companies or the other big category is what? Digital asset treasury companies. So that means everything in the physical US economy is being liquidated and put into internet companies and internet currencies. Think about it like this: many people identify the internet and America, but what if you asked, "Are they distinct?"
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
What is America minus the internet? It's not prosperous. The only thing people can point to-
- JAJack Altman
Yeah
- BSBalaji Srinivasan
... when they say America, right, is the internet.
- JAJack Altman
Internet and te- technology generally, maybe I would say.
- BSBalaji Srinivasan
Technology, yeah, but that, but that is the internet. Like, the internet is... Like, it's, it's a more precise way of talking about it because, for example, in San Francisco, San Francisco tech, do they make their money from selling sourdough pretzels or like, like, you know, you know, ice cream cones on the Golden Gate Bridge?
- JAJack Altman
No, it's not-
- BSBalaji Srinivasan
Do they make money at Candlestick Park? No. Or whatever it is, 3Com Park now.
- JAJack Altman
Yeah.
- BSBalaji Srinivasan
Is it Oracle Park? Whatever it is, you know. They don't make money from the city of San Francisco. They make money from Morocco and Mexico and, you know, Malaysia, and so there, there's credit card swipes happening all over the world, and those flows of funds are coming into companies in San Francisco, and those are paying the taxes that are then enabling all of the crazy homeless addicts to smash your windows and, you know, do drugs and so on and so forth, right? So that, that has nothing really to do with the city of San Francisco. You're not mining silicon out of the hills of Silicon Valley.
- JAJack Altman
No, just-
- BSBalaji Srinivasan
Right?
- JAJack Altman
... people who happen to live there.
- BSBalaji Srinivasan
They just happen to live there for now, right?
- JAJack Altman
Right.
- BSBalaji Srinivasan
And in my view, it is a, it's a terrible strategic error to be saying you're doing AI and saying it's gonna disrupt all these jobs and so on, especially blue jobs. 'Cause going after blue jobs, right? It's going after doctors, lawyers, uh, journalists, artists, bureaucrats, teachers, professors. The blue base, which already feels imperiled and is already radicalized and crazy and mad-
- JAJack Altman
Right, it's gonna increase the more they feel on their heels.
- BSBalaji Srinivasan
Yes, and, and look, I actually think AI doesn't just take someone's job, it also lets you do any job. You can do a decent job as an artist. Um, AI, you know, like, the, the, the hype around job replacement, I think, is actually not really that true, okay? Nevertheless, it's being presented as such.
- JAJack Altman
You're saying it's not that true, like it's, like the data's not actually showing that it's happening?
- BSBalaji Srinivasan
No, because AI does it middle to middle, not end to end.
- JAJack Altman
Yeah. Do you think it'll stay that way, or do you think it will get end to end matter of time?
- 46:56 – 50:53
The Network State
- JAJack Altman
State.
- BSBalaji Srinivasan
Okay, so look, you've known me for a while, and I think s- you know, we had, we had a talk in 2019 or something like that before I left SF, and I think, like, those slides held up pretty, pretty well.
- JAJack Altman
I can't believe it. Yes, they did.
- BSBalaji Srinivasan
They did, right?
- JAJack Altman
And you were... A, a lot of the stuff that you talked about, that you're talking about now, you were saying then, and a humongous amount of it turned out to be right.
- BSBalaji Srinivasan
And I think the reason for that is if you... Like, I'm kind of a student of history, and sometimes, like, it's like billiard balls, where things will kind of move in a certain way, you know, over time. And so I can't always get the individual wiggles and so on right, but I can, I think I can s- get them... It's like, it's like a force diagram. You kind of have the macro forces. I'm doing ns.com and Network School and so on and so forth because I actually am a centrist, right? That say, I believe in capitalism, so I agree with the center right on that, but I believe in internationalism, and I agree with the center left on that. I agree with the, you know, David Shor, for example, who's like a central leftist, or Noah Smith, right? Like, I feel they're pretty reasonable, and I can get along with them. I agree with the, you know, capitalists who are, you know, like, kind of queasy about the tariffs, and I understand why everybody wishes they could just get along. But I also recognize that-... in my view, the solution doesn't lie in America any more than in 1989, the solution didn't lie within the Soviet Union. The Soviet Union was a big and powerful empire, but it just had to take some time to itself, wind down its empire, had all kinds of crazy infighting for a long time, and, and the solution was on the other side of the world. So what am I, what am I doing with Network School, Network State? I am trying to be as politically uninvolved as possible in the US, but I'm trying to do my best to kind of continue what I think of as the best of American values. A fair handshake, capitalism, but tolerant, right? You know, internationalist and capitalist, right? But, but also many smaller things like, you know, don't start a fight with somebody online for no reason. Like, you know, try to be as win-win as possible. Pay it forward. Um, you know, like, a- all of these kind of basic aspects of etiquette where, you know... Like, like, don't post private messages. There's, there's, there's a hundred different moral goofs and gallants, from the small things like don't litter, to the larger things like, you know, don't first strike, don't start a fight online, right? There's all of these kinds of moral premises that are the values that underpin the valuations that I want to, and I try- I think I am, rebuilding on the other side of the world, and this is the third kind of thing.
- JAJack Altman
And you inherently couldn't just try this on some little coastal plot of land in California?
- BSBalaji Srinivasan
I think that is doing it on extreme hard mode. I know people are trying that. It's not magic dirt, right? The US isn't magic dirt. You know, to take a right-wing thing and, like, kind of reappropriate, re, re, re... Like, there's no reason that you have to do it in the US. It's a very expensive place. It doesn't want immigrants anymore. It's anti-tech. A lot of the structural forces, you have to build on the right platform. And, uh, I, I am the minority report. For sure, I'm the minority report, but I'm a constructive minority report because what I advocate for is people working together to build not just internet companies, not just internet currencies, but internet communities, where we know each other and can work together, and we have win and help win. And you can join as a member, and then when you decide to, you can also become a founder, and then we can build the network states of the internet.
- JAJack Altman
I think it's fascinating, and, um, I just love the way that you break all this stuff down, and it leads to these conclusions. And I've known you long enough and listened to you long enough that I know that, um, a huge number of your predictions that, at the time, sound unbelievable, over time, uh, a surprising number, uh, play out. And so I, I listen carefully, and I appreciate, I appreciate it. Thanks a bunch for making the time for this. Uh, this was awesome. Yeah, thanks again for doing that.
- BSBalaji Srinivasan
Thank you, Jack. [upbeat music]
Episode duration: 50:53
Install uListen for AI-powered chat & search across the full episode — Get Full Transcript
Transcript of episode 6IbKMOvH4_0
Get more out of YouTube videos.
High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.
Add to Chrome