back to indexE27: The Great Inflation Debate, Amazon gets spicy on Twitter, rethinking supply chains & more
Chapters
0:0 Besties get ready to rumble & discuss recent Twitter polls
7:25 Debating inflation, Sacks presents his deck
37:20 Amazon social team goes on the offensive, Facebook's regulatory capture play around content moderation
48:42 Suez Canal, rethinking our centralized infrastructure & supply chain risk management, infrastructure bill concerns
60:18 Microsoft in talks to buy Discord for $10B, Sacks on SaaS exits from Yammer experience
62:49 Poker talk, going to the movies, Disneyland, EU incompetence
00:00:00.160 |
hey everybody hey everybody welcome to the all in podcast with us today again 00:00:05.600 |
the queen of quinoa david friedberg david sachs the rain man himself 00:00:11.360 |
and of course the dictator here chamath and let's get ready it's it's time 00:00:26.080 |
sax is ready in the red corner representing richard nixon ronald reagan 00:00:32.720 |
and rich people everywhere david the rain man sax somebody's got a new corner representing 00:00:43.600 |
lbj underserved the forgotten the underdogs the woke left chamath paulie 00:00:55.360 |
and and i will also be representing john f kennedy who said arising who said a rising 00:01:22.240 |
tide lifts all boat and maybe even some bill clinton 00:01:24.720 |
bill clinton bill clinton i was gonna say don't forget the champion of the left and the right yeah 00:01:30.240 |
bill clinton did a great job he ended he ended the welfare state all right so here we go folks um in 00:01:38.640 |
in show housekeeping we do need to point out that uh we we've been running some polls the fans of 00:01:47.280 |
the show have been running polls and i i don't even know why i'm bringing this up because i got 00:01:51.840 |
barbecued in them but we have three questions and we're going to do a little bit of a show on that 00:01:52.820 |
and we're going to do a little bit of a show on that and we're going to do a little bit of a show on that 00:01:52.820 |
and we're going to do a little bit of a show on that and we're going to do a little bit of a show on that 00:01:52.920 |
and we're going to do a little bit of a show on that and we're going to do a little bit of a show on that 00:01:53.120 |
and we're going to do a little bit of a show on that but we have three polls we need to share with 00:01:55.760 |
but we have three polls we need to share with 00:01:55.760 |
but we have three polls we need to share with the audience from twitter the first is if you could 00:01:58.800 |
the audience from twitter the first is if you could 00:01:58.800 |
the audience from twitter the first is if you could have just one of the all-in pod besties 00:02:00.640 |
have just one of the all-in pod besties to mentor you and your startup growth 00:02:02.640 |
to mentor you and your startup growth who would it be and why looks like rain man 00:02:05.280 |
who would it be and why looks like rain man you ran away with that one with 39 00:02:07.520 |
you ran away with that one with 39 the dictator with 34 queen of kinwa coming 00:02:10.100 |
the dictator with 34 queen of kinwa coming at a 17 and uber's their fourth investor 00:02:13.180 |
at a 17 and uber's their fourth investor came in with the measly eight percent i 00:02:15.380 |
came in with the measly eight percent i will tell you this is this is why 83 00:02:17.540 |
will tell you this is this is why 83 percent of startups fail they choose the 00:02:19.940 |
percent of startups fail they choose the wrong mentor 00:02:24.260 |
perfect so i was i was proud to win this one but 00:02:26.180 |
so i was i was proud to win this one but the truth is so chamath was slightly 00:02:27.940 |
the truth is so chamath was slightly ahead and then i put my thumb on the 00:02:30.180 |
ahead and then i put my thumb on the scale by retweeting the poll because 00:02:31.620 |
scale by retweeting the poll because obviously my followers are more likely 00:02:33.300 |
obviously my followers are more likely to vote for me yes so then i shot ahead 00:02:36.180 |
to vote for me yes so then i shot ahead and i kept real quiet because i didn't 00:02:38.180 |
and i kept real quiet because i didn't want chamath 00:02:40.180 |
want chamath retweeting it to his 1.2 million 00:02:42.340 |
retweeting it to his 1.2 million followers and if he had done that he 00:02:43.960 |
followers and if he had done that he probably would have blown me out of the 00:02:44.920 |
probably would have blown me out of the water but i kept real quiet until the 00:02:46.920 |
water but i kept real quiet until the time elapsed and then i and then i 00:02:49.240 |
time elapsed and then i and then i shared it with the group 00:02:51.240 |
shared it with the group nobody keeps a track of uh followers but 00:02:53.560 |
nobody keeps a track of uh followers but uh it's actually closer to 1.5 00:02:59.240 |
the only person who knows your follower account better than you chamath is phil 00:03:01.080 |
account better than you chamath is phil helmuth 00:03:06.440 |
actually every morning phil help me subscribe uh 00:03:07.800 |
subscribe uh subtracts his number of subscribers from 00:03:10.120 |
subtracts his number of subscribers from yours to know the net all right second 00:03:12.120 |
yours to know the net all right second poll came up thanks matt for this by the 00:03:14.120 |
poll came up thanks matt for this by the way matt yarger no friend of mine 00:03:17.080 |
way matt yarger no friend of mine all right per request let's do another 00:03:19.080 |
all right per request let's do another poll and see the other side of this 00:03:20.680 |
poll and see the other side of this story if you could have just one of the 00:03:22.600 |
story if you could have just one of the all in pod besties moderate your podcast 00:03:24.920 |
all in pod besties moderate your podcast who would you choose 00:03:26.600 |
who would you choose and it turns out the dictator 31 00:03:30.360 |
and it turns out the dictator 31 to my 30.6 percent a full 00:03:33.560 |
to my 30.6 percent a full one percent more than me 00:03:35.560 |
one percent more than me i came in second world's best wingman 00:03:38.280 |
i came in second world's best wingman and rain man 00:03:42.520 |
21 queen of king 16 and then most importantly which 00:03:44.520 |
16 and then most importantly which bestie would you want in your on your 00:03:46.200 |
bestie would you want in your on your side in a bar fight i will say it's 00:03:47.640 |
side in a bar fight i will say it's chamath's smooth velvety voice that uh 00:03:50.120 |
chamath's smooth velvety voice that uh that ran away for him here 00:03:52.120 |
that ran away for him here thank you yes i think i think that no i 00:03:54.680 |
thank you yes i think i think that no i think the audience is just trying to 00:03:55.720 |
think the audience is just trying to hurt jason 00:03:57.720 |
hurt jason they're just trying to hurt jason that 00:03:59.160 |
they're just trying to hurt jason that was it that was it 00:04:01.480 |
was it that was it that was it jason has heard he's inadequate by more 00:04:03.560 |
jason has heard he's inadequate by more than one percent for a long time 00:04:09.160 |
oh it's i mean people usually it's measured in inches not percentages 00:04:11.000 |
measured in inches not percentages somebody was dunking on me on twitter 00:04:12.840 |
somebody was dunking on me on twitter and they're like you are the poorest of 00:04:14.760 |
and they're like you are the poorest of all your friends i was like that's the 00:04:16.620 |
all your friends i was like that's the strategy 00:04:17.820 |
strategy always have more powerful and richer 00:04:19.740 |
always have more powerful and richer friends than you 00:04:20.780 |
friends than you then you don't have to worry about 00:04:21.900 |
then you don't have to worry about picking up the check okay uh and then 00:04:24.620 |
picking up the check okay uh and then there was another interesting 00:04:26.700 |
there was another interesting ai breakthrough this week wait did you 00:04:28.860 |
ai breakthrough this week wait did you talk about the bar fight what was the 00:04:30.220 |
talk about the bar fight what was the bomb curious oh the bar fight one hold 00:04:32.360 |
bomb curious oh the bar fight one hold on you're right i didn't get to that one uh 00:04:34.600 |
you're right i didn't get to that one uh the bar fight 00:04:36.600 |
the bar fight was oh here we go for some reason 00:04:40.200 |
was oh here we go for some reason these morons seem to think that your 00:04:42.360 |
these morons seem to think that your stick legs are going to help them in a 00:04:44.680 |
fight bro that's a bad i honestly i i need to 00:04:47.160 |
bro that's a bad i honestly i i need to correct this like that was maybe bad 00:04:49.080 |
correct this like that was maybe bad lighting or a bad camera 00:05:05.240 |
honestly they're not they're guys guys guys guys guys honestly come on they are 00:05:08.040 |
guys guys guys guys guys honestly come on they are 00:05:08.040 |
guys guys guys guys guys honestly come on they are not as skinny as people seem 00:05:10.200 |
not as skinny as people seem to be railing and honestly i'm i'm happy to 00:05:13.400 |
to be railing and honestly i'm i'm happy to you know if if there's a standard way 00:05:15.160 |
you know if if there's a standard way of measuring 00:05:16.680 |
of measuring okay you know what jason if there's a 00:05:18.280 |
okay you know what jason if there's a standard way if 00:05:19.000 |
standard way if somebody can tell us what is the 00:05:20.200 |
somebody can tell us what is the standard way of measuring 00:05:21.720 |
standard way of measuring leg circumference i'm happy to submit my 00:05:24.680 |
leg circumference i'm happy to submit my my my measurements i don't think they're 00:05:26.920 |
my my my measurements i don't think they're that skinny 00:05:28.200 |
that skinny they're really really anorexic it's super 00:05:31.000 |
they're really really anorexic it's super disturbing thank you 00:05:32.440 |
disturbing thank you you got a lot going on up top i'm very 00:05:34.200 |
you got a lot going on up top i'm very proud of you but below the belt it's not 00:05:36.300 |
proud of you but below the belt it's not true bro i work on my legs a lot you 00:05:38.060 |
true bro i work on my legs a lot you know it's it's it's keep working it's 00:05:40.200 |
know it's it's it's it's it's keep working it's 00:05:40.220 |
know it's it's it's it's it's keep working it's legs and abs to keep your back 00:05:41.980 |
legs and abs to keep your back strong i will tell you guys one thing 00:05:43.180 |
strong i will tell you guys one thing this this uh podcast will win in a poll 00:05:45.740 |
this this uh podcast will win in a poll is the hosts talk about themselves more 00:05:47.580 |
is the hosts talk about themselves more than any other podcast on the internet 00:05:51.500 |
we need to talk about each other in order to make fun of each other yeah this should be called the 00:05:55.020 |
naval gaze podcast all right here we go let's go uh besties that you most wanted to fight queen 00:05:59.980 |
of quinoa coming in dead last yeah i'm coming in at 17 rain man 32 and shamath i guess that thirst 00:06:07.020 |
trap you tweeted got your 39 in that poll the other the other thing these polls is is why 00:06:13.740 |
democracy doesn't work but go on too much i can i can hold my own in a physical altercation i think 00:06:19.260 |
yeah i think you want chamath and i because i think sax is going to be under the table calling 00:06:24.140 |
9-1-1 and freeburg's going to try to talk it out and get just absolutely sucker punch like guys we 00:06:30.700 |
don't really need to fight jason jason is the one that would smash the beer bottle create a shiv and 00:06:37.260 |
say let's go i would i would have jason uh i would i would actually pick jason his number one if you 00:06:43.740 |
were going to be in a bar fight jason certainly touts his taekwondo skills on more than one 00:06:48.380 |
occasion he's clearly a good player but he's not a good player at all he's a good player at all he's 00:06:49.020 |
a good player at all he's a good player at all he's claimed to be an expert in taekwondo can we 00:06:52.540 |
claim to be an expert in taekwondo can we pull up the video isn't there a video of you doing 00:06:54.380 |
pull up the video isn't there a video of you doing 00:06:54.380 |
pull up the video isn't there a video of you doing taekwondo where's the video of jason pushing 00:06:57.340 |
taekwondo where's the video of jason pushing hellmuth 00:06:59.900 |
hellmuth fake news video if you want to see jason 00:07:03.500 |
fake news video if you want to see jason and a grown man another grown 50 year old 00:07:05.980 |
and a grown man another grown 50 year old overweight man fighting we have video 00:07:11.180 |
well i that that one i don't know if we should show but nick you should 00:07:12.220 |
should show but nick you should definitely insert the image of jkal 00:07:14.140 |
definitely insert the image of jkal trying to do the taekwondo kick and it 00:07:15.900 |
trying to do the taekwondo kick and it looks like he's about to have a 00:07:17.180 |
looks like he's about to have a herniated groin 00:07:20.780 |
herniated groin insert that picture yeah it was from my 00:07:22.380 |
my 20s. All right, let's start. So what do you got? What do we 00:07:25.380 |
I guess that the topic we should get right to is inflation. This 00:07:29.040 |
is a topic we've been talking about a whole bunch because 00:07:32.340 |
we're printing a ton of money. Everybody seems to think the 00:07:35.340 |
hedge against inflation is to buy Bitcoin, or do you put your 00:07:38.340 |
money into equities? And are we actually going to see things 00:07:42.440 |
other than homes and education massively inflate? We've seen 00:07:47.400 |
some anecdotal evidence of this. Tesla increased the price of 00:07:51.000 |
their cars, used cars have gone up in price, which is a function 00:07:54.840 |
of the lack of production of some cars during the pandemic. 00:07:59.200 |
So there might be a multitude of factors there. But just putting 00:08:02.440 |
it out there, are we going to go are we going to face inflation 00:08:05.160 |
that you know, goods and services are going to just go 00:08:07.620 |
through the roof and cost? Or do we have enough efficiency in the 00:08:10.860 |
system that the average consumer is not going to see massive 00:08:13.440 |
inflation on the products and services they buy? Coming out of 00:08:16.840 |
poison isn't the isn't the real issue that Chema says inflation 00:08:20.800 |
because it creates a quality and he thinks 1979 was a great 00:08:29.680 |
Oh, let's let's go. I think we should go to Chamath to explain 00:08:34.400 |
Okay, there. So I think David, you got unnecessarily emotional 00:08:39.160 |
and personal that was not again, these these were things that I've 00:08:42.280 |
learned from someone who I will say without betraying him is an 00:08:50.600 |
And I think he's a very good person at an extremely well 00:08:54.800 |
known institution that basically has helped make a lot of sort of, 00:09:00.800 |
you know, capital allocators very smart about things and has 00:09:03.800 |
made people a lot of money. So I was relaying what I learned 00:09:07.220 |
through him. So let me just relay that, again, and I'll just 00:09:11.300 |
start with this. Whenever you have a dollar of income, you can 00:09:14.780 |
do one of two things with that income, you either consume 00:09:20.400 |
you can save and you can put it into investments for the future, 00:09:23.280 |
right, so consumption and investment. The reality is that 00:09:27.160 |
most people so the lower 60% of the income distribution, 00:09:31.320 |
essentially spends above their income, right, the lowest 00:09:35.280 |
actually spends at so $1 earned is $1 spent, and then the middle 00:09:39.280 |
two because they have access to credit $1 earned, they spend 00:09:42.440 |
about, you know, percentage points more than that, when you 00:09:50.200 |
population, they're actually able to save and they save about 00:09:52.880 |
13 cents of every dollar, and they're able to invest in the 00:09:55.260 |
future. So consumption and investment, the reality is 00:09:57.700 |
inflation comes through a volume of activity, right? So you as a 00:10:02.760 |
rich person can go and buy one $100,000 necklace at Tiffany's, 00:10:07.300 |
it doesn't move the needle for inflation. But when you know, 00:10:11.080 |
200,000 people buy $1,000 television that's felt in the 00:10:15.280 |
economy, it moves. So inflation comes because of gross tonnage 00:10:20.020 |
So you need consumption. And by definition, what that does is it 00:10:24.440 |
pushes consumption into those, you know, that 60 to 80% of 00:10:29.180 |
people that are not the top 20%. So what it means is that, you 00:10:33.340 |
know, you have a volume game of people buying things. And when 00:10:37.180 |
they buy more of those things, inflation goes up, how do they 00:10:41.560 |
buy more things, they have more income because their propensity 00:10:45.040 |
is to consume. So then you have to ask yourself, where is this 00:10:49.840 |
income coming from? And all he has observed, which I think is 00:10:54.160 |
very credible is, we have the supernatural event in the 00:10:57.240 |
pandemic, we've now started to print trillions of dollars of 00:11:00.660 |
incremental consumption. And that's going to start to lead to 00:11:04.360 |
the most simple ways in which consumption manifests in 00:11:07.000 |
inflation, which is via commodity prices. What does that 00:11:10.020 |
mean? Let me state simply, a rich person lives in a well 00:11:13.580 |
insulated house, drives an electric car, and eats fish. A 00:11:19.660 |
lives in a poorly insulated house, lives, you know, drives an 00:11:24.460 |
SUV, and eats beef, beef versus fish as a simple example, it 00:11:30.160 |
consumes 20 3050 100 times more input costs to generate that 00:11:35.320 |
same pound of protein than a fish does. It's just an example 00:11:38.440 |
of showing how income distributions and the effects and 00:11:41.620 |
the consumption patterns of large swaths of people drive 00:11:45.220 |
different consumption behaviors which drive inflation. So all 00:11:49.480 |
me was that idea, which is that we have printed trillions of 00:11:54.700 |
dollars, we are creating artificial levels of 00:11:58.120 |
consumption, that consumption will actually drive up 00:12:02.140 |
commodity prices, commodity prices will actually drive up 00:12:05.020 |
inflation. Then what he told me was, the best analogy, again, 00:12:11.140 |
it's not perfect, but it rhymes to the history is what actually 00:12:15.340 |
happened in the 1970s. Which is that by having 00:12:19.300 |
this sort of boundary condition, you have to ask yourself what 00:12:23.020 |
will happen if inflation rips higher. And, you know, starting 00:12:26.960 |
in the late 60s, through the 70s, that's kind of what you 00:12:31.900 |
had a same kind of boundary can forget the way in which the 00:12:37.060 |
money got to people, you know, in this case, it was a 00:12:39.100 |
government check. But in the late 60s, and early 70s, we had 00:12:42.800 |
similar kinds of programs, we had Head Start, we have, you 00:12:46.600 |
know, AmeriCorps, we had food stamps act, we had food stamps, 00:12:49.120 |
we had the Social Security Act, all of these things were 00:12:52.180 |
transfer payments. And when you put that much money into the 00:12:55.660 |
hands of a large swath of people, consumption went up, 00:12:58.540 |
commodity prices went up, inflation went up, it peaked in 00:13:01.960 |
1979. But it also happened that when that happened, the gap 00:13:06.220 |
between the rich and the poor was the lowest it had ever been. 00:13:09.040 |
And so I thought that that was a really interesting thing to 00:13:12.460 |
Okay, Sachs, you were triggered, you were triggered by this. 00:13:26.860 |
No, no. Let me explain. Let me explain what's wrong with the 00:13:30.760 |
take. I created a PowerPoint. So I pulled a Chamath. No, it's 00:13:36.940 |
not boring. And Chamath has done it too. So don't don't even go 00:13:40.780 |
I'm gonna do email you guys come and hit me up at the second 00:13:43.180 |
No, no, free. We're gonna keep the freeberg index high. So go 00:13:46.840 |
ahead, Sachs, take us through the PowerPoint. What is what do you want? 00:13:48.760 |
Okay, I'll keep this quick. Okay, so I've called the PowerPoint 00:13:52.960 |
David, it says right at the top of the disclaimer, here is 00:13:59.560 |
something I learned today. Why isn't my take? 00:14:02.140 |
Well, you said you responded to me then saying that I didn't 00:14:06.640 |
like facts. So that was your response. So I am proving I'm 00:14:10.660 |
going to show you some facts. Okay. So first of all, let's 00:14:14.020 |
ask the question was 1979 a good year? I don't think you can 00:14:18.580 |
I'm going to go back to the the Gini index and say that this was 00:14:21.820 |
some sort of great year 1979 a severe recession begins which 00:14:25.540 |
ultimately leads to negative point 3% GD growth in 1980. The 00:14:30.040 |
word stagflation misery index become household terms. We had 00:14:33.160 |
unemployment of 6% on its way to 7.2% in 1980. We had a 13.3% in 00:14:38.920 |
inflation rate. The prime rate for 30 year mortgage was 11.2%. 00:14:43.960 |
Yeah, good luck trying to buy a house. We had long lines of the gas pump. There 00:14:48.400 |
was an oil embargo. Do you guys remember the gas pump lines? I wasn't born yet, but go on. 00:14:53.320 |
Yeah, it was crazy. And then you know, Jimmy Carter declares a national crisis and confidence. 00:14:58.720 |
This was the so called Malay speech. He was well on his way to becoming a one term president. So 00:15:03.520 |
what this shows is David that you know, David, hold on that. No, no, let me just let me just do 00:15:08.680 |
the takeaway. So the takeaway is that you know, the Gini index says 1979 was a great year. And 00:15:14.440 |
you know, the the issue is the reason it wasn't is because it's a lot easier to 00:15:18.220 |
make everyone equally poor than ever than equally rich when the economy does poorly. 00:15:22.720 |
Guess what the gap shrinks. Then Margaret Thatcher had a great line about this. So 00:15:27.820 |
long as the gap is smaller, they would rather have the poor be poor. That's a great video. 00:15:32.080 |
Everyone should watch on her last speech to Parliament. Chamath posted this chart 00:15:37.240 |
showing this was the percentage of wealth held by the top point 1%. Chamath, we'll go to you next 00:15:43.420 |
to explain one, two and three. But let me just point out, look at when else the Gini index was 00:15:48.040 |
happening, the 1930s. The Great Depression did a great job creating relative equality by making 00:15:53.500 |
everyone poor. So my point is, yeah, I understand there are these qualities, but you know what 00:15:58.600 |
creates inequality, economic booms. That's what creates inequality. What we should care about is 00:16:04.540 |
not just inequality, but economic growth, real wage growth, poverty, how many people are below 00:16:09.820 |
the poverty line and concentrations of power. So that's what we should be looking at, not just 00:16:14.380 |
this Gini coefficient. Let me stop there. I've got other slides, but I'll stop there and let 00:16:18.340 |
Sax, go back one slide. The three points there were just interesting to me. Number one was 00:16:24.940 |
LBJ and the war on poverty and all those social programs. Number two, and you spoke about this, 00:16:31.360 |
but I don't think you're doing a full accurate assessment. What Carter's biggest mistake was, 00:16:36.700 |
was he stopped the transfer payments. Because LBJ started them, Nixon continued them, 00:16:43.420 |
Carter stopped them. And I think it's important to frame— 00:16:47.680 |
What transfer payments are for people who don't understand. 00:16:49.240 |
Well, it's basically like there are all kinds of ways to get money into the hands of individuals. 00:16:53.740 |
We now talk about universal basic income. That's a way of transferring money from the government 00:16:59.860 |
and from systemic holders of capital to individuals. Food stamps was a way. The 00:17:06.520 |
social security was a way. There's all kinds of different ways. 00:17:10.180 |
Welfare was a way until Clinton disassembled that. So I think that what we'll never know is 00:17:17.500 |
what would have happened if Carter hadn't actually stopped those balance of payments. 00:17:23.140 |
And the key point is about what happened then afterwards in three. So you had this basically 00:17:30.940 |
stopping by Carter. He didn't get to reap any of the benefits of it. Reagan comes in and says, 00:17:37.120 |
"You know what? We're going to simplify the tax code. We're going to defund all kinds of stuff, 00:17:41.080 |
including, for example, all the mental health defunding that he had already done in California 00:17:45.040 |
that spewed people with mental health diseases." And then he says, "You know what? We're going to 00:17:47.320 |
put all these diseases onto the streets of San Francisco and Los Angeles." 00:17:49.780 |
And that sort of continued. And then the real cataclysmic change on top of all of this, 00:17:56.740 |
which sealed the fate of that trend line, happened in point number three, which is when George Bush 00:18:02.740 |
in 2001 had this really seminal decision, which is he had the ability to block China from entering 00:18:10.720 |
the WTO, and instead he let them in. And he traded that for a vote on the Security Council. And when 00:18:17.140 |
you think about what really happened there, you unleashed 1 billion people willing to do anything 00:18:22.480 |
at a cheaper, faster, and better rate. You ushered in globalization. You ushered in the gutting of the 00:18:28.120 |
middle class of America. And you transferred all that wealth creation that could have happened in 00:18:32.620 |
a more inefficient but in a balanced way that could have benefited Americans, and you shipped 00:18:37.720 |
them abroad to China. So I think it's just interesting to note that basically since 1979, 00:18:43.840 |
we've all been singing from the same playbook. 00:18:46.960 |
And I think that maybe what we need to do is figure out whether we need to come back 00:18:52.240 |
to this idea of shifting the balance of payments back into the hands of individual consumers. And 00:18:58.420 |
all I'm saying is, without making a judgment, is when you look at what Biden has done just 00:19:04.900 |
in the first 60 days, $1.9 trillion of stimulus and a proposed $3 trillion stimulus package were 00:19:17.260 |
And then when you look at what Biden has done in the last three months into his presidency, and you forecast that forward, it feels like we're entering an era of spend, spend, spend. And that was an opinion of mine, which I believe is actually fairly accurate. I do think it will drive inflation. I do think it will drive commodity prices. And I think on balance, I do think it will suppress the wealth creation of the rich. And I do think it will give folks that don't necessarily have investments the ability to make more in real income, which they will spend. 00:19:40.420 |
that don't necessarily have investments, the ability to make more on real income, 00:19:45.320 |
Well, okay, just quickly. So I'm going to begin by agreeing with the part of Chamath's 00:19:49.680 |
response that I agree with, which is what happened around 2000, 2001, which killed wage 00:19:56.600 |
growth for the average worker. Chamath is right about that. But it wasn't just George W. Bush, 00:20:01.700 |
it was a bipartisan disaster. In 2000, Bill Clinton pushes Congress to approve the US-China 00:20:07.780 |
trade agreement and gave them full access to the WTO. This was basically temporary MFN. 00:20:14.280 |
And look at what he said. He said, economically, this agreement is the equivalent of a one-way 00:20:18.540 |
street. It requires China to open its markets to us in new ways. And it turned out to be a 00:20:23.840 |
one-way street the other way. And then he also said that for the first time, our companies will 00:20:27.680 |
be able to sell and distribute products in China made by workers here in America without being 00:20:31.420 |
forced to relocate manufacturing to China. We'll be able to export products without exporting jobs. 00:20:37.660 |
It happened. And then what happens in 2001 is Bush makes this situation permanent. He grants 00:20:44.180 |
what's called permanent normal trade relations, which is basically MFN status in perpetuity 00:20:49.620 |
to China, granting them full access to our markets. And Chamath is right that that devastated 00:20:54.940 |
the average worker because all of a sudden, they're being forced to compete with foreign 00:20:59.900 |
labor that's potentially making $2 a day and is not subject to the same labor laws and environmental 00:21:07.640 |
And the U.S. are so I agree with Chamath about what happened then. But I got to go back and 00:21:12.580 |
clean up this view of what happened between 1980 and 2000, because that's where I think we have 00:21:20.220 |
Let's talk about the China thing for a second. 00:21:22.860 |
We made a mistake there. We got hoodwinked. We don't have access to their market. I think it 00:21:28.940 |
would be good to pause for a second and say, okay, we tried this experiment for 20 years. 00:21:32.940 |
There was some good that came out of it. Our companies were able to grow and become 00:21:37.600 |
the dominant players in the world like Apple, but an Amazon, right, we did capture a lot of this 00:21:42.960 |
value. And a lot of people came out of poverty in China, I guess on the margins, that's a good 00:21:47.920 |
thing we can all agree. But it's a communist country. And we basically enabled a communist 00:21:51.740 |
country to become essentially, you know, our counterparty in running the planet and in our 00:21:58.940 |
leadership positions on the planet. What do we do now in terms of unwinding this? Is there a way to 00:22:04.020 |
roll this back? Or do we just mute it from this point forward? And how does it become a communist? 00:22:07.580 |
How does it become a two way street? Or is that just not even possible, as we've seen with the NBA, 00:22:12.460 |
and some other companies, Twitter, Google, just not being allowed to even operate in China? 00:22:17.020 |
Who's we? America, United States, the United States, I mean, US citizens, US companies, 00:22:22.780 |
global companies. I mean, yeah, you know, I think that the challenge is your your framework, right? 00:22:28.060 |
Guys, I think I think there's one big thing you're forgetting in 2001, which is, I think that Bush 00:22:33.260 |
actually traded away access to the WTO, so that they could guarantee China's vote when he wanted to vote. 00:22:37.420 |
He wanted to go to war with Iraq, which happened in 2003. Okay, well, two dumb decisions that got 00:22:44.060 |
worse by being put together. All I'm saying is it was a trade, it was a trade, he traded, he traded 00:22:48.280 |
access to he traded access to the WTO in return for their support for a UN resolution to go to war 00:22:54.420 |
with Iraq. Look, I you know, you said that I was defending the Republican point of view. I'm not 00:23:00.660 |
I'll be the first to say that George W. Bush was his presidency was a disaster. I think it'll go 00:23:05.320 |
down as one of the worst. He got us into all these stupid foreign wars in the Middle East, he began 00:23:10.840 |
them. I think the decisions with China were a mistake. So I certainly don't want to defend that. 00:23:16.300 |
And by the same token, I think the Clinton years were generally great years in America. So this is 00:23:23.940 |
what do you think about the China concept here and how we would go forward? And what's the what's the 00:23:29.500 |
I mean, again, like, I think it comes down to your objective, and who are you 00:23:35.220 |
solving for? And who should we solve for democracy, the human species? Well, I mean, I feel like the 00:23:44.400 |
point of view that, you know, one government is innately better than another is being tested and 00:23:49.380 |
proven right and wrong every day right now. And, and I'm not sure that it's fair to say that just 00:23:55.780 |
because the form of government that the you know, that the Chinese have kind of adopted and used to 00:24:03.180 |
govern their, their, their, their country and their people. 00:24:05.200 |
is innately wrong. There's certainly things that are innately wrong in many democracies and that are 00:24:10.200 |
innately wrong in many non democratic republics. And so I'm not sure it's fair to just say that, you know, 00:24:17.200 |
that that's really the objective is let's get rid of that communism. I mean, that was an easy kind of simple, 00:24:21.200 |
you know, check that you could use a few decades ago as a way to kind of rally everyone emotionally towards 00:24:27.200 |
some cause. But I think there's a lot of businesses today that operate effectively in their own kind of 00:24:34.200 |
And it's a little bit of a kind of misstatement to think that an American company is an American company. 00:24:41.200 |
It's not that American quote unquote, American companies solely build their stuff and sell their stuff in the United States. 00:24:47.200 |
Many American quote unquote, American companies build stuff overseas and sell stuff overseas. And global is globalization as much as we might want to kind of poo poo the effects it's had on the average quote unquote, American worker. 00:24:59.200 |
It really has transformed the way businesses operate with respect to 00:25:09.200 |
God, what's the book, I can't remember the book, but there's a book that speaks to how a lot of large multinational corporations today effectively have to operate as if they were countries into and unto themselves. 00:25:20.200 |
And so they have competing interests with respect to what the average American or the American government or the American people might have, even though they might be quote unquote, American companies, and there might be some intricate tie. 00:25:33.200 |
And so I'm not sure it's as simple as we have to quote unquote, defeat China, we are so intricately tied to the, to the economy of China to the workers of China, and vice versa. 00:25:44.200 |
And I think that it's a much more complicated thing than you know, here's our three point checklist for how do we quote unquote, beat China. 00:25:50.200 |
And that's, that's why it's hard. And that's why I think a lot of smart people have, you know, kind of taken on and been challenged by and failed at trying to resolve a path forward where there's this quote unquote, looming enemy. 00:26:02.200 |
And so I think that's what's going to become the global economic power, which strips the American people of their influence around the world. 00:26:09.200 |
And you know, that may be kind of the inevitability of the 21st century. 00:26:12.200 |
I don't think that's a dark inevitability if but I don't know if there's a simple easy answer. 00:26:16.200 |
And I don't know if from a from a business point of view, let's say I'm a company. 00:26:21.200 |
I'm not sure I necessarily feel the effects of one quote unquote country affecting, you know, having more influence globally with other countries and others. 00:26:29.200 |
It turns out a lot of businesses have greater influence than a lot of governments. 00:26:31.200 |
And so, you know, one way to kind of think about the evolution of globalization, and maybe even with respect to kind of the notion of what we've been talking about decentralization, is that maybe governments themselves become less important in the 21st century. 00:26:45.200 |
And it's the kind of decentralized online movements and businesses and you know, other kinds of entities that perhaps are not as regulated and controlled and owned by governments and you know, maybe the big failure of the 21st century will be governments.