All right, everybody, welcome to Episode 94 of all in. This is the summer unprepared episode. There's not much news. We're gonna wing it. With me again, in his golfing cap, the Rain Man himself. David Sachs, you do okay, buddy. Yeah, that's good. Yeah. All right. I'm kind of annoyed that we're taping on a Wednesday.

You know, this is a slow news week. It's a slow news. Well, that's not why we're taping on a Wednesday is because you have to want to go to Burning Man. Well, whatever. I mean, listen, everybody has to get their burnout. Have you ever been to Burning Man? Yeah, I've been before.

Burning Man. Really? He was there on threesome Thursday. I've been a couple of times. I think it's, it's a cool experience doing worth doing, you know, once or twice in your life. It's not something I want to do every year. But I know a lot of people do like doing it every year.

They're like really into it. I'm not really into it that way. But I think it was a worthwhile experience to go at least once. Jamal, have you been? No. Freiburg? Have you been? I've not been no, I have no desire. No, I don't like driving in the car for a long period of time.

And well, by the way, I'll tell you, I'll tell you why I don't really have a huge desire to go. I I don't really have a huge desire at this point in my life to want to do a ton of drugs. That's not that's not just about that. Really?

No, really. What it's really about is art. Are we joking right now? It's if you like art and you like music. It's amazing. It's amazing. It's amazing. I really I really like art. I think I actually collect phenomenal art. In fact, I like to go to like freeze the bien ale.

It would blow your mind. You have no idea the scale of the art there is tremendous. It is extraordinary. And if you're into music, we just can we just call it what it is. It started out as a festival that did celebrate art and creativity. Yeah. And over time became mass market.

And in order to become mass market, there is still an element of that. But it's a huge. Huge party. And I think people should just be more honest that it's super fun. You can really rage for a weekend or for an entire week. And people should enjoy themselves. But let's not like, have to put all these labels about how like intellectually superior it is and how you feel like bullshit.

I don't think it's really it's okay. It's okay to go and do drugs. The thing that's interesting about it is it's really about community. A large number of people get together they build can do drugs. No community. No, you've never been you would. Literally, that's not the vibe there.

The vibe is really dancing and creativity and art and community. But anyway, so it's like a rave. It's where everybody's on drugs. I mean, sure. I mean, with neon with a lot of neon. No, it's it's much be those experiences are the best when you're sober. Best best you have to understand the grace going to EDC sober.

I've never been to EDC. But this there's a great filter here, which is you've got to drive six, seven hours into the desert. And you have to survive. You have to bring everything with you and bring everything out. You know, whatever it is a bathroom water food. And it is harsh.

I mean, it's 100 plus degrees in the day and it's 40 degrees at night. It's not easy to survive. It's hard. It used to be that way. When I went on when I went, I went with a bunch of guys who had the whole thing like wired in and they had like these yurts and it was like a whole community and they had like running water and a kitchen and it was basically glamping.

It was glamping. There are people that hard to survive. No, they're I mean, it's hard to do that. There are people who glam it is hard to do that because you have to see where you have to go with people. You have to go to people who know what they're doing and are highly organized.

So yes, they take months to set up. So yes, they spent the whole year whatever setting it up and it was really elaborate. And then there was an article like in the New York Times basically saying that you know that they were ruining Burning Man because they're making it too nice.

That was part of the problem. You remember this? That's when I went I went to the too nice experience. They wrote that about you. Yeah, basically you ruined Burning Man. Great. Thanks, Sachs. Thanks for ruining Burning Man. Let your winners ride. Rain Man David Sachs. We open source it to the fans and they've just gone crazy.

Queen of Kinwa. I don't know if you've been following the NFT story. We'll queue that up as our next story. OpenSea, the marketplace, the eBay of NFTs, if you will. The volume has dropped. 99% since May 1st peak of $406 million in a single day. On August 28th volume dropped to around $5 million.

Down 99% according to decentralized app tracker DappRadar. On a monthly basis, OpenSea's volume has dropped 90% according to Dune analytics. The floor price of a Bored Ape has now dropped by 53%. If you remember, OpenSea raised $300 million. $300 million. $300 million. At a $13.3 billion valuation December 2021.

In a round led by KOTU and Paradigm. To put that in perspective, that was nine whole months ago. My how the world has changed. Freiburg, what's your take on NFTs and this whole boondoggle? I don't know how to how we look back on it. Yeah, I don't know. I mean, we've had a lot of bubbles as a species.

This is just another one. I thought we're gonna stop doing stock market crashing stories. Well, this is different. This is a different market. What do you think? Did you invest in any of these NFTs? We're in the 8th month of this story, which is fill in the blank asset class crashed.

Yeah. This one scene. The question I have here, Sax, is do you think that this is the end of the category though? Do you think that's a category ending? Do you think there was ever anything interesting here? Because you took you heard a lot of pitches like I did, for how NFTs were going to change everything non-fungible.

You know what, I'll say something because I like in the past, I think I've said this to the point, just to tie it back to what we just talked about. At the end of the day, you know, I think I've said this in the past, but like what differentiates humans from all other species on Earth is our ability to tell to communicate and tell stories.

A story is like a narrative about something that doesn't exist. And by telling that narrative, you can create collective belief in something. And then that collective belief drives behavioral change and action in the world, right? I mean, everything from religion, to government, to money, to art is all kind of driven, all markets are driven by this notion of narrative and collective belief that arises from that narrative.

So when you go to an art dealer, and you have a sit down with an art dealer, you might appreciate the art. But then the narrative begins. And the narrative is this artist did this and they came from this and the artist that looks like this traded at 6.8 million.

And this artist is only trading for 3.2 million. And the whole narrative takes you away into Okay, I should pay 3.2 million for this piece of art. And ultimately, it'll be worth more. And that's the fundamental premise of markets is you're buying into something not necessarily always and this is such a minority.

Now it's scary. used to be that you don't a piece of a business or productive asset, you pull cash out of it. Hopefully you get more cash out than you put in when you buy it. Nowadays, markets allow you to trade. Therefore, the majority of market based decisions are driven by if I buy something for x, I'm going to be able to sell it to someone else for y.

And so the narrative is driven around, I'm paying this someone else will pay y down the road, I'll make money from that. And this has been repeated 1000 times over, it's been repeated in the ICO tokens, it's been repeated in the tulip bubble. It's been repeated in every art market and subsidiary of every art market since the dawn of time, since the dawn of markets.

And I think the NF T's are really just one more kind of example where this beautiful narrative is formed, the digitization of art, but it is no different than any other form of advertising. The real point is that there's no longer a market for me to buy. And so if I buy something for x, I'm going to be able to sell it.

So that's one of the ways that I'm going to be able to sell it. And the other way that I'm going to be able to sell it is to make my own assets, which is the way that I'm going to be able to sell my assets, which is the way that I'm going to be able to sell my assets.

And I'm going to be able to sell my assets, I'm going to be able to sell my assets. And I'm going to be able to sell my assets. And I'm going to be able to sell my assets. And ultimately, you can maybe trade out of it early. But still, so much of it became about, well, the stock is going up.

Therefore, if I spend x, someone else will spend y, and I'll make money on the stock with no underlying assertion of what's the productivity of that business, what's the return on cash going to be based on the cash flows coming out of that business over time, or any of the fundamentals around it.

And so so much of our discussion and distortion has really been driven by this narrative fueling. And I think the NFTs are an example, but there are many others. And we're going to see many more, as long as humans have the ability to communicate with each other. Any you have any take on it, Jamal?

I think Freeburg's mostly right. Like, I do think that there's this thing, the the Burning Man Coachella example is the best way to describe this. A lot of these things are the same. But when a few people approach something early, they're too insecure to admit that it's the same as something else.

And so they spend a lot of time trying to tell you a narrative about why it's totally different. The Buffett example, you know, would be the quote, you know, when somebody tells you that this time is different, it's probably not that different. Or the other quote that's well worn in history is like, you know, things don't necessarily repeat in history, but they rhyme.

All of this is trying to say that other than like, fundamental leaps of science, there's not a lot of stuff that's new in the world. You know, we are repeating things over and over. And one of the things we repeat is the social capital that you get from having certain choices, and then getting other people to validate those choices, because you want to feel like you're, you know, worthwhile.

And this happened in NFTs. And I'm sure in the first phase of different movements in art, that also happened. It's probably happened in a bunch of other markets as well. So these things are more similar than they are different. Coachella and Burning Man, the same. NFTs and part of the art market, the same.

Everybody that runs to you with why it's so different. I would just have a grain of salt and say, you don't need to be different. Just enjoy it because you think it's cool. All right, we can go either to this California fast food wages story, or we can go to Goldman Sachs workers are quitting en masse because Goldman Sachs is saying you got to come back to the office five days a week.

Where do you want to go, boys? I think the California thing is really interesting. Just the three things that California did in the last five days a week. Where do you want to go, boys? I think the California thing is really interesting. Just the three things that California did in the last five days a week.

I think the California thing is really interesting. Just the three things that California did in the last five days a week. Where do you want to go, boys? The three things that California did in the last week. I don't know if you guys saw but number one is they basically said that you know you have they're going to ban ice combustion engines, I think by 2035.

So you have to be battery EV. And they have new sales, you can still have a new sales, sorry. Yeah, new sales, which is the first in the country to do it. And just to go back to a second California is the largest auto market in the United States.

And effectively, you know, Trump in California got into huge spat, because California had certain emission standards that were tougher than the rest of the United States. And, you know, the federal government tried to sue California and back and forth all of this rigmarole. So California is always sort of led on climate.

That was one thing. Then the second thing is they said, we're going to create, you know, a state sponsored organization to set the minimum wage rates for fast food workers. Pause what we think about that. And then the third thing is that this congresswoman, I think, or this assembly person, Buffy Wicks, passed a law through the Senate and through the house, that essentially holds social media companies liable for the mental well being and the mental health of kids.

And depending on where you're lying on all these issues, it's like an interesting kind of lens in which we're like, California is really becoming extremely, extremely legislatively active and basically in imposing their will on free market. And so I think that's a really interesting thing to look at. And I think, you know, we're going to have to look at the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government.

Yeah, and for people who don't know the fat, the fast food issue was, they want to move to a more European style where instead of unions, debating with individual corporations, McDonald's Burger King, whoever, what they're going to pay their employees, or employees having that discussion one on one, they want the state, some state authority to pick the amount per hour, fast food companies pay.

And then I guess, you know, we're going to have to look at the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and the federal government and then I guess disintermediate the unions.

It's kind of confusing. But interestingly, I've our friend, the Raina Gonzalez, if you remember, she's the one who told Elon to, you know, F off. And was a former Democratic legislator. She introduced the bill when she was in the assembly. And so it's kind of a weird approach. I'm not sure why the government No, it's not.

It's not. It's not disintermediating the unions. She learning a lot of the law. And then I guess disintermediate the unions. She learning a lot of the law. And then I guess disintermediate the unions. She learning a lot of the law. And then I guess Gonzalez, Fletcher, I guess now she's the former Democratic legislature who drove Elon out of the state.

Remember when she said, you know, F Elon? And now she works message received? Yes, and he left. Great, great move for for the state. So she is now running one of the biggest unions. And what she said is that this bill will move California closer to the labor model used in Europe, where unions negotiate, the unions are still negotiating for wages and work conditions.

But in an end, it's going to be a big deal. But in an entire sector, with some sort of government board, rather than company by company. So in other words, it's too slow to unionize, you know, company by company, they would just want to unionize entire sectors of the economy.

Now, the thing that's really crazy about this minimum wage proposal is that, like you said, Jason, it isn't just that they set a minimum wage, they created a 10 person panel. So there's a new government agency that's going to regulate fast food, fast food, the fast food industry, you know, they're not going to stop a minimum wage, it's gonna be work conditions.

So now you're turning fast food restaurants into a highly regulated part of the economy. And the weird thing is, it's not even just all fast food, it's basically chains that have more than 100 fast food restaurants nationally. So in other words, if you're a local operator of two McDonald's, you'd be subject to this 10 person board.

But if you own 20 restaurants that aren't part of a national chain in California, then you're not. And so the weird thing is that some workers in the fast food industry could get this new minimum wage of $22, where other or as other workers who work for, you know, they're not part of a major chain would get the statewide minimum wage at 15.

So it's, it's, it's kind of unfair in that some parts of the restaurant industry are being regulated and others aren't. Is there any justification here that you can think of to not let the free market do its thing, Friedberg? Well, if you represent the workers, you're saying, Hey, pay him $22.

And you can, and here's what that points out. It actually points out that there's probably a pretty big business flaw in a business that's so reliant on commodity labor. And that business in and of itself is not as valuable as you might have thought it was before. Think about it this way.

There's a company called McDonald's. And then there's another company called McDonald's labor. And what happened before is McDonald's employed people to do work at McDonald's. And maybe what happens in the future is all those people are looking left and looking right. And they're like, you know what, McDonald's has nothing without us.

We are the business, we deserve the value. So in terms of how much of the value of the business flows to the shareholders of McDonald's, versus the employees that work at McDonald's, the employees that work at McDonald's are saying, let's go do a startup. And our startup is called U.S.

unemployed people to do work at McDonald's. And maybe what happens in the future is all those people are looking left and looking right. And they're like, you know what, McDonald's has nothing without us. We are the business, we deserve the value. So in terms of how much of the value of the business flows to the shareholders of McDonald's versus the employees that work at McDonald's, the employees that work at McDonald's are saying, let's go do a startup.

And our startup is called Union. And our business that's called Union is now going to provide a bunch of services to McDonald's. And those services, we're going to start to value capture what they're doing. And it indicates that maybe there's something inherently disadvantaged in that model. And it could be that the argument could be made that that business in the early 20th century, in the late 19th century, yeah, the 19th century, early 20th century and beyond, that you could build a good advantaged business because there was such an eager, hungry workforce, people looking for work, people would come and work for nickel an hour or whatever.

And so you as a business owner could make a lot of money doing that you could sell a product for $1, pay people 5 cents to make it for you. But nowadays, those people are looking left, they're looking right, they're like, wait a second, we are the business, or we're 90% of the value of this business.

And so a couple things will happen. Number one is the inherent business model of a company that's so dependent on commodity service is going to be flawed and challenged in the 21st century. And fast food restaurants aren't going to be as valuable. Businesses that rely on commodity service are not going to be as valuable.

Number two, businesses are going to automate. So new businesses will emerge that actually do the fast food work, or do the car building work, or do the dock loading and unloading work that are automated, and they'll have an inherent advantage in the economy. And they'll win. And I think number three is that in the near term, consumers will suffer because prices will go up, because someone has to pay for the incremental cost of running this unionized business.

And that will ultimately be the customer of that business. I'll say the fourth thing is that the consumer will suffer. And I think the fourth thing is that the consumer will suffer because prices will go up, because someone has to pay for the incremental cost of running this unionized business.

And that will ultimately be the customer of that business. And I think the fourth thing is that the consumer will suffer. I'll say the fourth point is, I am concerned about this sort of behavior in regulated spaces, where the government has actually control over the market itself. So this is a good example of this is, you know, we had our friend Ryan from Flexport on a few times, but you can't just start up a shipping company and have a dock, the docks are run by the cities, and they're run by the state.

And so those docks access to those docks access to that market is regulated by the government. So then what happens is the union, right, the the labor company can actually have regulatory capture through the government of a segment of the economy. And that's where things start to get dangerous.

So look, I'm all for unions, if they want to show that a business is reliant on a commodity labor force and commodity service, and they all band together and start a startup. I mean, that's what we do. We all start a company. Yeah, go and compete. But the issue is then when the government creates regulatory capture over a segment of the economy, and make it difficult for the free market to ultimately do its job, it's a very difficult job.

of either automating or creating a newly advantaged business model, or all those things that allow us to progress. Automating is coming. A couple of us made a bet on a crazy idea of like automated, robotic coffee called Cafe X. Not to talk our own book here, and the company really struggled during the pandemic.

But they have two units at SFO Chamath, they're doing 70 $73,000 in two units last month. And I'm like, wow, the company figured it out. And there's another thing that's going on. And that's the fact that we're not going to be able to do a lot of the work that we're doing.

company doing franchise. This is the this is the sad thing that California doesn't realize is like, I think that the folks writing these laws have just an extremely poor understanding of economics and capitalism. Because the first thing that it does, effectively, and everybody can understand this is it caps the profitability of a company, right?

Because it effectively says, if you look at an industry that is over earning, then this council will essentially see money that should be reappropriated to employees. Now, that idea is not necessarily a bad thing. For example, you see that all the time in technology, right? If you look at the EBITDA margins of like big tech, and how they've changed, they've actually eroded over time, as the companies have had to generate more revenue, because employees demand more and more of those gains.

That's an implicit part of how the free market economy works in technology. So you know, if you don't feel like you're getting paid well at, you know, Google, you go to Meta, and you get paid more and vice versa. So there's a natural effect of people being able to do that in certain markets.

But when you impose a margin and essentially say you can only make 10%, because the rest of these profits I'm giving to these folks, because I've imputed their new wage to be something that's much greater than what they were paying before. The unfortunate thing is what Freebrook said, which is that you will rebuild that business without those people.

Because it is the rational thing to do. And so unfortunately, what you'll do is you'll take a bunch of people that should be in the economy, right? Think about like, new immigrants or young people that are first getting on their feet, they'll take these jobs, you know, I mean, I've worked at Burger King, when I was 14.

That's how I got my first you, those jobs won't be there to be had. And that has ripple effects as these folks get older or try to get more ingrained in the economy. And this is what I wish California would understand is that these things aren't free. And even if you're not free, you're not going to be able to get out of the economy.

And so, you know, I think that's the thing that's really important. And I think that's the thing that's really important. And I think that's the thing that's really important. And I think that's the thing that's really important. And I think that's the thing that's really important. And I think that's the thing that's really important.

And I think that's the thing that's really important. And I think that's the thing that's really important. And I think that's the thing that's really important. obvious consequences that you're ignoring, by not really understanding how the economy works. I'll just say like, look, these people can I I'll say, but I mean, you know, the people that are elected, are elected by the people to represent the people.

They're not elected to govern over the long term plan, necessarily for the state. And while you think that those two may be the same, the near term incentive and the near term motivation of someone who's voting is I want to get a benefit for myself sooner rather than later, not necessarily, I want to make an investment for 30 or 40 years down the road.

And if you're an individual that's struggling in some way, you're going to prioritize the former over the latter. And you're going to elect someone who's going to go put in place public policy that's going to benefit you. So I don't necessarily raise my hand and say, I blame the people that have been elected.

I raise my hand and I say, Look, this is the natural evolution of what happens in a democracy where there is a struggling class. And there were where there is some sort of view disparity or considered disparity, that this is what's going to happen in a democracy under this condition is that you're going to elect individuals who are going to go and govern and they're going to make decisions that are going to benefit those individuals that got them elected over the short term.

And there may be some real long term damage that results. sacks as a part of this problem is that people are now looking to the government to solve their problems in life versus maybe looking internally to solve their problems and negotiate better salaries. And I think you have to give people a little bit more credit.

Nobody was asking for them to step in like this. Look, this is as much for the politicians as it is for any of the workers. What's happening right now, the National Restaurant Association and all these restaurant lobbying groups are flooding, the state, the legislators, the governor with lobbying money, because they want to get this bill modified, tempered or thrown out.

And so this is basically a racket like look, as a public policy matter, it makes zero sense for the same worker if they go work at say, Jiffy Lube or something outside the restaurant industry, they get the California minimum wage of $15. If they go to a mom and pop restaurant, they get the minimum wage of $15.

But if they go to McDonald's, they now get a new minimum wage specifically for chain restaurants of $22. That simply makes no sense. There's no public policy rationale. But the real question you have to ask and Toronto's kind of getting at this is, why shouldn't it be $50? Why shouldn't it be $100?

Well, the reason is because if you raise the minimum wage too much, then these employers have a huge incentive to replace that labor with automation. And so the unintended consequence of tomorrow is talking about is that these big chain restaurants are going to rely even more heavily on automation now.

And they're going to basically employ less of this labor, where the price has been artificially raised for that sub sector of the economy for 15 to $22 for reasons that no one can really explain. So again, this is not for the benefit of workers, it's for the benefit of the politicians.

Look what's happening right now, is all these articles talking about the lobbyists coming in, they're going to have Gavin Newsom begging him to be their savior right now. And this is the game that the California Democratic Party plays. It's a one party state, where they were basically business loves Gavin Newsom, because he's their protector.

He's the protection end of the extortion racket. Lorena Gonzalez gets this bill passed, which is basically incredibly damaging to these chain restaurants, and they have to go running to Gavin Newsom and beg him to either veto it or modify it temper the bill. So it's not as destructive to their business.

He's a protection in the extortion racket, but it's the same racket. This is a one party state. And what they're doing with chain restaurants they would do with every sector of the economy, if they could, it's just a matter of time. And what is the purpose of the California government?

Like, are there things they could be focusing on other than this, like maybe the free market settles this issue, and they could extract benefits from the private sector from basically the wealth producing part of the economy, and to line their pockets in the pockets of their supporters, you know that the typical government worker in California makes 53% more than their private sector counterpart.

And if you factor in all the pensions have been promised, it's 100% more. Okay, so basically, there's a huge wealth transfer that's taking place, where the we're basically the legislators, the party, they are transferring wealth from the private sector to their supporters, their backers. And free where you talk about democracy, listen, I mean, California is a one party state and ballot harvesting is legal here.

I'm not saying the votes are fake or anything like that. But there's a giant party machinery and apparatus that literally just goes door to door and collects the ballots from their supporters, they literally know who their supporters are on a door by door household by household level. It has gotten to the point now where the party machine is so powerful, they can pretty much run anybody for any post and get them elected.

It's very hard for an outsider candidate. It does feel like we're getting tired of it here. No, but guys, that's exactly how it works. I mean, like, if you look at Gavin Newsom's run to the governorship, he paid his dues, he did the right jobs, he waited in line, he didn't, you know, rock the boat, independent of any of the things he did right or wrong.

And he had some pretty big moral transgressions. It didn't matter, because it is about paying your dues and waiting in line, because there aren't any meaningful challenges here. None. In LA right now, there's a mayoral race going on. And the two there's a runoff between Rick Caruso and Karen Bass.

Karen Bass is basically a product of the political machine. She's basically worked her way up in the Democratic Party forever, sort of uninspiring candidate. She's just basically a puppet of the machine. Caruso is actually he's a real estate developer who's built some of the most landmark, you know, spots in LA like the Grove, like the Pacific Palisades development.

He's made incredible. He's created incredible amenities for the LA area. He's also been on a bunch of civic boards. You know, I had lunch with him, at the Grove and people were coming up to him. He's like a celebrity. They were taking photos with him. He's the best possible candidate that you could have in a place like LA.

He actually understands business. I think he would restore law and order. I mean, all this kind of stuff, right? He's spoken out about the homeless problem being out of control. And on election night, he had the most votes. But five days later, when they counted all the the basically the collected ballots through ballot harvesting, Karen Bass was up by like five points.

That is the power of the Republican Party. And the ballot harvesting, and I still hope that he wins. But the party machine is so powerful, they can basically get almost anyone elected in the state. Can't the bad. Change it. What's that? Just devil's advocate here, the ballot harvesting can work both ways.

Like you could go collect Republican votes? No, but you have to have the party infrastructure to literally go the Republican hasn't. The Republicans haven't built. Think about it this way. Okay. So, you know, like your phone, there's a platform and there's an app. Think about the party as the platform and the candidate as the app.

Okay. The platform can drive a ton of traffic to whatever app they want. A guy like Caruso doesn't have the party behind him. So he has to build his own operating system. He used the media. Right. Exactly. So he has to build his own platform. Then he has to build his own candidacy.

So when you think about the amount of money that's required to do something like that about how hard it is to do it. It's it's very, very hard. So he spent something like $100 million of his own money. Hopefully he wins. But if he doesn't, all the infrastructure, all the platform that he created just goes away.

And then the next candidate has to start from scratch. This is why outsiders is almost impossible. Why hasn't the GOP invested in California? They just don't think they have any shot because it seems like the Democrats are investing heavily in trying to flip, you know, look, there's a two to one party affiliation.

There's a two to one party affiliation in California towards Democrats. So look, I mean, the Republican Party here is a mess. And that's part of the problem is the Republican Party in California needs to move to the center. It's a plus 30 blue state, unless they're willing to do that, they're not going to make progress.

But that could take, you know, generations to fix. And with Roe v. Wade, and that kind of stuff, it's gonna be really hard to look, there are pro choice Republicans in California. But all Newsom has to do is point to what's happening in Texas. And, you know, all of a sudden, people kind of revert to their tribal political affiliations.

I'll make I'll make one more simple point. The average voter in California, probably knows more people that work at McDonald's than our shareholders of McDonald's. And I think in any time that there's policy that gets voted or get suggested, or ultimately gets passed, there's a side that benefits and there's a side that doesn't.

And if you know more people that benefit on one side than are hurt, you're probably going to be supportive of that policy. And I think that's probably a pretty simple rubric for thinking about how these things over time, of all anything that's true nationally, what why is it only true for California?

I mean, like in Florida, Florida knows more people who work at McDonald's and shareholders McDonald's, and they're not engaged in a systematic takeover of the private sector philosophically, then they believe in independence and businesses not being interfered by the government, right? That's a core tenet of the Republican Party.

Also, the sad reality is that within a few years, unfortunately, you'll know a lot fewer people that work at McDonald's because the number of jobs for humans will be much lower than the number of people that work at McDonald's. And so the number of jobs for humans will be dramatically lower.

They got rid of the cashiers that's gone already, or what people will be more acutely aware of in a number of years is how expensive McDonald's has gotten. Because if the price don't know that that won't be because like, again, McDonald's has a very simple, no, not not even the market.

McDonald's is not stupid. They understand how to use Excel. And so they'll think, well, I can amortize a robot versus actually jacking up prices, because what McDonald's understands is the sensitivity of pricing to demand for their customers. Right? I mean, they are the most intelligent about how they price every anything at the sort of the lower end where you're capturing, you know, nickels and dimes, they are the most sophisticated and understanding supply demand, and and, and the curves.

And so to think that they're not going to just invest heavily now at the corporate level, the next franchisee of McDonald's will still pay a million dollars for franchise fee, but we'll give will be given a bevy of robots that they rent from McDonald's, and they'll have to hire half or a third less.

That's, that's the real shame of this, which is the number of people that should actually be gainfully employed in the economy will then shrink again. But in this case, it was because legislators just completely don't understand how incentives work and how the economy works. And people are not clued into exactly how well narrow AI machine learning is doing right now.

By the way, I'll say like, Jen, what's really moving quickly. One general way to think about this is technology is introduced and the technology creator captures roughly a million dollars of the value increment, because of the delivery of that technology, the productivity increment. So let's say that it costs $12.15 an hour to employ a McDonald's labor today.

And let's say that you can build technology that the amortized robotic cost is $10 an hour, there will be a technology company that will make 250 an hour off of that. So net net, what ends up happening is productivity has to be gained, and prices will reduce. And so you know, there are moments like this where there could be an acceleration of technology, and also an opportunity for new industries to emerge.

And when that happens, new jobs emerge too. So it's, you know, maybe look, I mean, at the end of the day, it seems Luddite ish. But, you know, there's going to be a mark a market opportunity that will arise. I think we need to like, just step back and, and ask what is the type of economy that California is creating here with this fast food law with these other laws we're talking about.

This is a state in which you have a disappearing middle class, the middle class has been moving out of the state. By the hundreds of 1000s. In fact, last year, we had for the first time, net migration out of the state. This is basically become a state where the only middle class are basically the government workers who like we talked about, are making twice as much as their private sector counterparts.

It's a state where you have the very rich and very poor, and the only middle class or government workers, that is what we're creating the rich in the state have done really well, over the last few decades. Why? Because globalization. So you take the two big industries in the state tech, and Hollywood, entertainment, they have benefited enormously through globalization, because now you can sell software, or you can sell movies or music.

Exactly. So now these these industries have become, you know, massive global exports. And so if you're in those industries in California, you've done really well, because now your market is the whole world. So the super rich have done really well, that's funded the state that's allowed the state it's almost like a resource curse to have all of these bad policies that really hurt small business owners, they've been moving out of the state.

And so again, you've got the very rich and very poor. This is not an economic model for the entire nation. This is what you know, Gavin Newsom says he wants to take to all of America. This is not a model for all of America. In order for democracy to function, we need a thriving middle class.

And this is not a recipe for delivering a thriving middle class to America. And that I just want to show you guys a quick video, which play for five seconds here. So we had invested in this company that got sold, I'm not going to say the name of it.

But if you watch this quick robot, this is a computer vision company out of Boston. And like, they're doing high speed picking of tomatoes and berries. Like this is a two year old video when we invested in one up getting bought by another company, and they're doing vertical farming, but and there's companies doing this now for French fries, it's over, like we are within, you know, I think, 510.

years of a lot of these jobs, and we're talking 10s of millions of manual labor jobs being gone. And we're going to look at this moment in time, where we try to squeeze an extra 10 or 20% out of these, you know, employers. And then you're gonna see these employers say, you know what 24 hour a day robot?

Yeah, it's a little bit upfront cost, I'll put it on a lease, and they're just going to move to these robots. It's really very close to being game over for manual labor. And you can see it also with Cybertruck. And you know, what Elon's doing with AI and these things are getting so close.

And it's been, I don't know, when did you invest in your first robotics or AI company, Saks or trauma? Do you remember the first robotic or AI company you invested in? And how long ago was 2014? It's a company called relativity space, which is 3d printing rockets and engines.

And basically, they're able to use machines to learn how to actually fix the morphology of all the materials that they use to print better and cheaper and more useful rocketry. That's an example. But then that led me down the garden path, I was just going to say something more generic, instead of talking our book, which is, I think people misunderstand that Moore's law has actually not ended.

And this is something that a friend of mine, Adam D'Angelo, characterized to me, beautiful human being from work together. He was a CTO of Facebook when I worked there. So we this is, you know, we've known each other for 1516 years. And now he's a CEO and founder of Cora.

But you know, the way that he described it to me, which is so true, the minute he said it, I was like, my gosh, it's like Moore's law never ended, it just shifted to GPUs. You know, because the inherent lack of parallelization that CPUs have, you solve the GPUs.

And so that's why the surface area of compute of innovation has actually shifted Jason to what you're saying, which is, you know, all of these new kinds of machine learned models, because you can just now brute force and create such a tonnage of compute capabilities and resources to solve these problems that weren't possible before.

So, you know, you see this thing, you know, fun things like Wally, or, you know, Dali, sorry, and more sophisticated things like GPT three. But he's right, which is that, you know, we are at a point now where all kinds of expert systems, which is sort of like v1, simple forms of AI, are going to be completely next level.

Well, you think about the data sets adding to that. And so when government exactly. And so when governments don't understand this, and they try to, you know, step in, they're going to be shocked at how much faster they're pulling forward the actual future they actually are trying to prevent.

Yeah, the the data sets is the other issue freeberg, you look at, you know, the the data sets that are available to train. So you have the GP, you have the GPUs still escalating massively, the amount of compute power can do you have cloud computing at the same time, and then you have these data sets.

One of the most interesting things about, you know, Dali, and a lot of these is the corpus of data they're able to absorb. And a second factor issue that is starting to come up is who owns the derivative work in copyright. So if you train your data set on a bunch of images, and those images are owned by Disney, or whoever, you know, photographer Getty, and then the AI makes you a new photo, so here's another, here's another example of this.

Here's another, here's another example of this in a law that just passed. So in the IRA, the Inflation Reduction Act, you know, we granted CMS and Medicare the ability to negotiate drug prices. And we actually also capped the total prescription costs that any American can pay at $2,000. Now, it turns out that overwhelmingly, most Americans will never spend $2,000 a year on prescription medications.

But there will be a few, and they bump up against drugs that cost millions of dollars. So there was a, you know, there's a drug for, you know, SMA. That's like, you know, 2.4 million, and like, you know, beta thalassemia of like 2.8 million. And you're and we will all bear the cost of that.

Now, if CMS and Medicare, go and really crunch those costs, what is pharma going to do? Well, pharma is going to do what is the obvious thing, which is like, if you're going to cap what I can make, I have to completely change my R&D model. And they're just going to use alpha fold, you know, and what it's really going to do is potentially put a bunch of research scientists out of work.

And those are folks that should probably in the, you know, for our general future be gainfully employed. But the nature of their job is going to change completely, because the economic capitalist incentive of big pharma is going to move towards technology, which is, you know, the alpha fold, and their protein library is the equivalent of AI and automation for McDonald's.

So this is where again, governments have to be super careful that they understand what's actually happening, because they're creating incentives, I think that they don't completely understand. All right, we can go to raw meat for sacks, Zuckerberg's admission of FBI meddling, truth social. Well, after you guys disputed me and like, how dare you imply that J.

Edgar Hoover and Jim Comey's FBI is politicized. Remember, you guys were debating and it was about the investigation. You didn't, but some of you were saying I can't believe sacks that you're part of the 35% of Americans who don't believe fully in the rectitude and integrity of the FBI.

I don't know if this is comes this bombshell. I mean, you gotta admit this was a bombshell. What was the bombshell? Okay, so Joe, Joe Rogan had zuck on. And he asked him about this very specific thing. Remember, the New York Post story on Hunter Biden's laptop in like the week or two before the election was censored, right?

And there's a very controversial thing, because the FBI was dealing with known Russian interference and hacks and all this stuff. Part of which Trump was like asking people to hack other candidates. Okay, you're not even setting this up correctly. Well, okay, I'm gonna keep going. And then so this is what Zuckerberg said, Hey, look, let's let sacks moderate this segment.

Well, I mean, I'm just gonna read the Federalist, which is, you know, super right wing, but he says, I'll just read this. I'm gonna just read you what zuck said, because that's says it all. He says, Hey, look, if the FBI, which I still view as a legitimate institution in this country, I'm quoting from the Federalist, which is quoting him from Joe Rogan.

It's a very professional law enforcement, they come to us and tell us we need to be on guard about something I want to take it seriously. So when the New York Post broke the Hunter Biden laptop story on October 14 2020, Facebook treated the story as potentially misinformation important misinformation for five to seven days while the tech giants team could determine whether it was false or not.

During that time, this is federal speaking, decreased its distribution, Facebook decreased distribution of the story by making the story rank lower in the news feed. And this is his quote, Zuckerberg's you could still share it, you could still consume it Zuckerberg explained, but quote, fewer people saw it than would have otherwise.

And while he would not quantify the impact, the Facebook founder said the decreased distribution was quote unquote, meaningful and a follow up Rogan asked if the FBI had specifically said, quote, to be on guard about that story, meaning the laptop story after originally responding, no Zuckerberg corrective says I don't remember if it was that specifically, but it was basically the pattern.

So basically, I guess you would agree, Saks, Zuck didn't know exactly what to do here with this information. And if it was real or not, which, you know, it turned out to be very real, and it probably could have swayed the election. I mean, I do think if people thought there was a connection, between Hunter Biden, maybe it could have, I don't know if we want people being hacked to do that.

So what's your take on it, Saks? You know, just hacking in general, and this specific thing, what should the FBI do? If these kind of hacks are getting released of people's families? Okay, so yeah, here's a complicated issue, right? There's many vectors. Yeah. What Zuck basically says the FBI came to them and encourage them to suppress the story or to suppress a story that they described that would be just like this.

Okay. So now look, a lot of conservatives are dragging Zuckerberg and Facebook for doing for doing the FBI's bidding. But I think a lot of people, I think most people in Zuckerberg's position would have believed the FBI when the FBI comes to you and says, you're about to be targeted by Russians information, you need to do something about it.

You would have listened to the FBI, he believed the FBI. My point is, so I don't blame Facebook too much for that. I think it's understandable that he would have believed them. The issue here is the politicization of the FBI. Look, let's back up what was happening. So, you know, so the New York Post gets this story about the leak contents of Hunter Biden's hard drive.

In response to that, you had 50 former security state officials, many of whom were Democratic partisans, like Clapper, like Brennan, they signed a letter saying that this story has all the hallmarks of Russian disinformation. Now, the truth is they had not inspected the hard drive. They simply said this is the hallmarks of it.

And as a result of that, Yeah. we thought that the social networks and so forth censored the story. Okay. Now it turns out that the FBI, by the way, the FBI had the hard drive. They had the hard drive for over a year. It was in a possession. They had an image of the hard drive or the actual hard drive?

They had the actual hard drive. They had the actual hard drive. The leak of the story was likely prompted because the FBI didn't appear to be doing anything with the hard drive. So, somebody leaked the story to, you know, to Rudy Giuliani, and then he leaked it and so forth to the New York Post.

But the point is, that the FBI had the hard drive. So, they knew it was authentic. Okay. So, they knew that this hallmarks of Russian disinformation was not the truth. Because again, they had the authenticated hard drive in their possession. And yet, they still went to Zuckerberg and basically played into this narrative, this phony narrative that, you know, Democratic partisans like Clapper and like Brennan had created.

Was there anything meaningful, by the way, about what was on the laptop in your mind? Like, do you think it's relevant? Do you think we want people's laptop? Are there any laptops being hacked like this? Who are in people's political families? I don't think the laptop was hacked. I mean, there's a weird convoluted story about how the laptop ended up.

But look, the point is... Should people's personal pictures, you know, and stuff like that be released? I never liked the part where they were showing Hunter Biden's, you know, drug use and the other personal stuff. I thought that was scurrilous. And I didn't like it. And I didn't think that was particularly germane.

So, I think, and I think it was an important part of the story. I think it was an invasion of his privacy. However, there were materials on there related to his business dealings in Ukraine. And I don't see how you can say those weren't relevant. Oh, I think they're highly relevant.

He's being investigated for them too now. I mean, a lot of this has to do with timing too. You know, it's like, how do you deal with something like this seven days before an election when you know the Russians are hacking it, if it has been or not? It's a really difficult situation for everybody, I think.

So, look, my point is this, that I can agree with you about the personal stuff about Hunter Biden shouldn't have come out. But with respect to the Ukraine stuff, that was legitimate. It was fair game. And the most importantly, I don't know whether it would have sworn the election or not.

Probably not. Probably by itself it's not. But the real point here is that the FBI went to Facebook to censor a story that they must have known was true because they had the laptop in their possession. They should not be intervening in elections that way. That is the bombshell here.

That's unbelievable. I think they didn't know the providence of this, but I guess we'll find out. Where are you landing? I think they're landing in the car drive that's in their possession. They didn't have an NFT. Exactly. You brought it full circle, Tremoth. Exactly. Yes, exactly. The audience wants to know, Sachs, the audience really wants to know, you were going to reserve judgment on the Mar-a-Lago search.

Where do you and or Republicans come out on all this now when you see, fuck, he did in fact have a ton of really sensitive stuff? Well, define ton. Define ton of really sensitive stuff. Yeah, I mean, listen, and he wouldn't give it back. He had 300 pages of documents marked classified.

If you were to go to the 30,000 boxes of documents that Obama took, are you telling me you really couldn't find 300 pages that have classified markings on them? Well, the fact that he wouldn't give it back. I never disputed, by the way. I never disputed. Hold on a second.

I never disputed that they would find documents with classified markings in Trump's basement. I still think that the approach was heavy-handed, and we don't know enough because we don't know what those documents are. Listen, every document they stick in front of the president, or not every, but many of them are marked classified.

Okay, so let me ask you this. Aside from these kind of details, what is Trump's deal that he just wouldn't give them back? What do you think his motivation was? I mean, I have my own theory, which he likes memorabilia. He's always liked to show off memorabilia. I think that's it.

I think you got it. Honestly, if I had to guess what this whole thing was about, it's probably that the archivist at the National Archives wants the original copy of those letters with Little Rocket Man, and he doesn't want to give them up. Right. And the assortment. And I'm not saying that's not true.

I'm not saying that's not true. I literally think that's what this is about. I think it's about something as silly as that. Memorable. Memorabilia. I think it's about memorabilia. I do not think these documents pose a threat to national security. Why wouldn't Trump just give it all back? It's so dumb.

But why would the FBI feel the need to do a raid? Well, because there's so much classified stuff, I guess. By the way, remember when we first discussed this? Hold on a second. When we first discussed this issue, we were told it was nuclear. It was nuclear secrets. Could be, yeah.

No, they've backed off that completely. It was not in the affidavit. It's not about nuclear. That was something they leaked to get them through a tough press cycle. So, but look, my point about all this stuff, just to wrap it up so people are clear, was never to defend Trump per se.

My real concern is the politicization of the FBI. Our law enforcement agency should not be weaponized by either party to pursue their political agenda. But you believe they are at this point? We just saw with the Zuckerberg thing, what business did the FBI have going to Zuckerberg to get them to censor a New York Post story that turned out to be completely true?

Hold on a second. That is election interference. They should not be doing that. Yeah. That is inexcusable. It's a tough job if they don't know if it's been stolen or not. Yeah, it's a tough job. By the way, the government of the United States has no business censoring a free press.

That is a violation of the First Amendment. When the government instructs a private company to censor a press story that the government itself does not have the authority to censor, that is a violation of the First Amendment. We thought, remember when Jack Dorsey said that he regretted the censorship that Twitter did?

And he came out with that apology? We thought it was just Twitter's decision. Now we find out from Zuck that he was leaned on by the FBI. And I think that these big tech companies like Twitter, like Facebook, they're going to have to have a new policy, which is when the government says, we want you to censor something, their response needs to be, show us a court order.

They cannot just censor now based on the say-so of some operative from the government. I would agree with you on that. I think it was a bad decision, obviously. The one big tech company that really nailed this, I think, was Apple. Very early on, they drew a really hard line in the sand with the San Bernardino shooter because they said, if we allow the FBI to get into this person's phone, even though what he did was completely heinous, we are going to create a backdoor that will become an exploit for everybody.

And we are drawing the line on privacy and security. Now, different set of issues, but it just goes to show you, there have been a few examples where some of these companies have drawn a hard line. And they have done it. And they have done it. And they have drawn a hard line.

And then in that example, and I think, Jason, you mentioned this, they went to Israel and had that company hacked the phone. San Bernardino. Okay, whatever. But it didn't come with, they were able to stand up to the pressure. So I think there are some examples, Sachs, where you can say no.

I mean, the idea that Twitter would block a New York Post URL, it's like, ah, such a jump ball. If it was the sex material, I could understand them saying, you can't hack it. That's against our terms of service, and we agree on that, Sachs. But in this case, like, I don't know.

Let's go to something more interesting. Well, heatwave, I think, and the drowning. I know this is interesting to Sachs, but I think it's interesting to everybody else in the audience. Heatwaves and droughts are just- Newsflash is hot in summer. Yeah, I think this might have to do with global warming and be a little unique.

I'm kidding. I'm kidding. I know there's more to it. You're kidding. Before all the ESG people get into Sachs and say, you don't, you're global. I love free- I do think the death of Gorbachev is a big story. Okay, we'll get to that after this. Oh, yeah, I think that's a great- The death of dying is a big story, too.

Let's give free Burke his science corner, and then we'll come back around. I gave you your raw meat. Sachs, what's your point of view on climate change, the impact it will have on the planet, and whether, like, urgent action is needed? Listen, I'm not an expert in that area.

I'm not going to pretend to be. I do think that we can't save the planet by destroying the economy. And it seems to me that too many of the Save the Planet people, like, want to take reckless, extreme actions that would wreck our economy. You just saw, actually, Elon just gave a talk and made news this past week from Norway, where he said that we still need oil and gas.

He's the leading innovator in basically moving to solar and renewables. I don't disagree with you, but- And he said, listen, unfortunately, we got to rely on oil and gas because it's too important for civilization. If we cut this stuff off too quickly, we end civilization. Yeah. And the- So, look- I mean, I think this is a long-term problem, and I think we need to have long-term solutions.

You believe in global warming. Just full stop. The planet is warming. You agree with the science. It seems to be. Sure, it seems to be. It's not just about warming. Just to use a different term, that there are more frequent extreme events that can severely hurt people, hurt the economy, hurt the food supply, hurt the energy supply, all the things that, you know, I think we're, like, all the way on the bottom of Maslow's hierarchy.

Like, these are the things that are going to be the most important. And I think that's the thing that's going to be the most important. These are the things that are most critical that they're starting to get disrupted in a pretty severe way. You know, I think that's the big question.

So, Sax, I think it's becoming, and this is where the transition starts to happen, that a lot of people kind of say, hey, over the long run, the temperature is going to go up by one degree Celsius over a century. You know, who cares? But there are kind of- The problem is this, is that, you know- And by the way, I don't disagree with your comment- Whenever somebody like me points out how insane some of these people are, I'm like, oh, I'm not sure who these policies are.

The topic has shifted to, are you a denier of some science or other? No. No. Listen, my point is not about the science. My point is, look at the collapse of the Sri Lankan economy because they implemented these ESG rules on fertilizer. Look at what's happening to the Dutch farmers who are being put out of work because of ESG rules.

California, California today, Governor Newsom today said, please don't use your electric power to charge your electric cars. A week after they said gas cars are now going to be banned in the state. And so there's a deep irony underway today in California because, and Fox News is obviously latched onto this story that- That has to do with the grid though.

I mean- Look, I've become suspicious whenever politicians invoke some crisis as the reason for some authoritarian measure, I've learned to distrust it. That's the point. And so, I guess I'm talking to you- You know what's happening in Europe right now is obviously gas is through the roof because of the Ukraine war.

The price has basically gone through the roof. And so, because of that, they're not able to produce fertilizer. And one of the byproducts of the production of fertilizer is CO2, which gets added to the production of beer to make it fizzy. Well, guess what? The Germans are not only about to run out of gas, they're about to run out of beer.

This is not why. You think they're going to keep supporting the Ukraine war when they find out that there's no beer for Oktoberfest? Forget it all, not be able to eat their- Eat their homes. They can't drink beer in October. This is- The Western life is going to fracture very quickly.

We need to sit down. We need to sit. Zach, just taking a beat for a minute. Like, taking off the table the political response, are you as an individual concerned about the impact of a changing climate on people and on the economy? And are you interested as an investor in the private market solutions to resolve some of those things that are obviously going to become market-driven problems?

Take the government out of the equation. I think there may be a long-term problem here. I'm not sure, like, how long it takes. I definitely think- I'm skeptical of this claim that, you know, the world's going to end in the next 10 years, because frankly, we've been hearing that since the 1990s.

1988. There's a great headline article, by the way, in New York Times, where it was like, scientists in 1988 said that all the oceans, all the ice caps will melt, the oceans will flood the land by the year 2000. So there is a credibility challenge associated with predicting, you know, kind of long-term outcomes like this that continues to kind of foment, unfortunately, right?

Yeah, all my beachfront property would be underwater right now if all that came true. No, I'm just kidding. But no, but look, it hasn't escaped my attention that many of the political leaders who are claiming that we're facing imminent threat of being underwater in 10 years own beachfront property and fly on private jets.

So, I'm not sure if that's a good thing. I'm not sure if that's a good thing. So obviously, you know, I'm not saying this isn't a long term problem. But I do think they try to create an imminent crisis. So they can shove through a bunch of bad policies that are very destructive to the freeberg there.

Would you define what's happening with temperature and extreme weather as a crisis or not? Yeah, I mean, there's there's a I would say there's a critical impact in and will continue to be a critical impact in the food supply chain. In the quarters and years ahead, because of what we're seeing so severe drought and heat wave in China right now.

And by the way, food is not the only one there's also the manufacturing supply chain. So in the province of Shishuan in China, they actually lost power because so much of the power is driven by hydroelectric plants. So streams and water flow has slowed down and stopped. As a result, there's less power as a result, the factories are being shut down.

As a result, key components for manufacturing in the computing industry and and in kind of mechanical goods are not being produced at the rate that they were being produced before that has a ripple effect in the supply chain similar to what we saw in COVID. And then in the food supply chain, we're seeing a drought and a heat wave.

Right now, we're coming out of it in the Midwest in the United States where we grow corn and soybeans throughout Europe, and also in China. And in China, they had 70 days in a row of record setting temperatures. 70 days in a row. Every day was a record. No water, high temperatures, the they're just starting to assess the crop damage, it looks pretty severe.

There was massive crop damage in the Midwest in the corner, the Corn Belt this year. And then obviously, European farmers are having issues. And combine that with the geopolitical issues of the Ukraine crisis and the natural gas pricing being so high, one third of fertilizer of ammonia plants have been shut down in Europe.

And they think that ammonia and fertilizer production may drop by as much as one half in Europe, because of the crisis. So energy prices are so high, you can't make fertilizer. So that energy is being also redirected into other industry and support homes. So you believe it's a crisis.

So I guess the question there, yeah, people are turning on their ACS in California this week, you know, you see that Governor Newsom just said, our grid in California cannot support excess electricity consumption. Therefore, one of the biggest variables is electric cars. He's saying don't plug in your electric cars this week.

And that's because of record high temperatures that are about to hit state California in two days. So look, everyone says, hey, these are kind of anecdotal stories. But no, it's a trick. Statistically, the frequency of extreme things happening is continuing to climb. And then the impact is in the food supply chain, the energy supply chain, and the manufacturing supply chain.

And there are follow on effects. Now, I'm optimistic that private market solutions will resolve these issues. And that was my next question is, can we solve this or not? Yeah, of course. I mean, look, we've had crises since the dawn of humanity. I mean, we were a starving, you know, we need a crisis to solve some of these problems.

These are pretty economically obvious. Yeah. And that's, that's my point that the private market will resolve because people want to have electricity, they want to have food, they want to have one need they need. And so so so the market will pay for those things. And therefore, producers and technologists will resolve to solutions to make that happen.

So we just have to have the problem and suffering and see it firsthand. Shama, the market to kick in. Your friend in the group chat that shall not be named posted this meme. You guys saw it right, which said like, an autistic schoolgirl takes what was it I have it here quit school, the dominoes.

You can show the dominoes. But basically, it said, an autistic Swedish girl decides to skip school is the little domino and seven dominoes later this huge dominoes it says the collapse of Europe's energy grid. And without commenting on the language used in the meme for a second. What is the point?

The point is, these conversations can so quickly go off the rails and are not about national security and economics and quickly become about moral virtue signaling that you missed the point. The point in the United States just to be very blunt, is that the cost of electricity has gone up by 46% in the last decade, it will go up by another 40 odd percent through 2030.

So between 2010 and 2030, the cost of electricity for every single American will have effectively doubled, even though the ability to generate particularly from wind and solar have been reduced by 90%. Now, why is that? Well, it turns out that if you look inside the PNLs of these utilities, it actually gives you the answer.

So over the next 10 years, we have to spend as a nation, just just on upgrading power lines? $2 trillion. This is all cap, this is all like, crazy, crazy oppex, right? CapEx, improvements for sunk cost investments, our powerline infrastructure in America is 20 plus years old, 30 years old, our generation infrastructure is pretty poor.

We have all of these failures, we don't have enough Peakers, we don't have ability to store energy when we need it. So if you add this all up, I do think that there's a huge economic incentive to solve it. And there are practical ways to solve it. And that's what we have to stay focused on.

Because if we allow the moral virtue signaling to get in the way, we're going to make some really stupid decisions. We're gonna go out trying to turn off nuclear. Another thing that Elon said, you know, we're not going to greenlight shale and nat gas, we don't have time for this.

If you actually believe this is a cataclysmic issue, you need to basically be okay with hydrocarbons, because it is the only credible bridge fuel we have to keep the world working properly. Because otherwise, what David said, is right, we are going to economically destroy parts of the world by trying to race towards this net zero goal.

By the way, guys, I just want to take the you know, rip the bandaid off. Net zero by 2050 26. It is not possible. There is zero credible plans that the world has to do it. So we have to take small incremental steps and many of them. Yeah, this is and we should stay focused on that.

Yeah, the interesting thing. And you cannot let people guilt trip you because this is when you make these stupid mistakes like the entire continent of Europe made really which is now going to cripple here's many economies of that of that entire continent unnecessarily. Here's the good news, all this virtue signaling and people wanting to be green and for whatever reason, all of that now economics and geopolitical stuff.

Right? I mean, that's what's going on. The other thing that I think is really interesting is that the government is forcing people to rethink nuclear, the Diablo Canyon, nuclear power plant, which is the last one in California that's operational. It's being voted on today as we're taping this and it's expected that they're going to keep it online.

The governor with the great hair wants to keep it going. And the fascinating part about this is how what choice does he have? Exactly. And so now the awareness is so high about power and us losing it and people don't understand how nuclear energy even works. And they're like, get rid of it.

I they went to a no nukes concert in 1978. And they haven't changed their position since but this is interesting. This guy, Gene Nielsen, who's been a champion of this stuff. He said, I thought our chances were zero of keeping this thing open. And he said, What's you know, any said he told this conference of attendees this nuclear conference, that the effort to maintain it, he said, what's happened since you know, the last six months has been like a snowball.

That everybody has changed their position just in the last year, on shutting these things down. And we saw obviously Germany is re you know, thinking the three remaining of their six that they were going to turn off, they're putting back on. And I think we're going to see new ground broken.

And Japan came out just in the last week and said they're going to build more nuclear power and nuclear power plants. Now think about that. That's awesome. That's unbelievable. They had Fukushima, the German shut off their nuclear because of Fukushima. But guys, the Japanese are saying we're building more Fuka guys, Fukushima didn't happen by accident.

There was a like, an incredible tsunami, which was triggered by a once in 100 earthquake. You're talking about these extremely long tail events. Yes, the retaining walls could have been built better. But these are things we find we iterate and resolve. It was not the reason to shut down an entire mechanism of energy generation, stupid mistakes where they put it just too low in the wrong place.

If they just put it up the hill, a couple of miles, it would have been fine. But also, if you look inside of what happened, there was enormous pressure inside of these companies to basically, you know, take take actual direct blame and responsibility. I get all of that. But these organizations were shamed into turning these things off.

That is not the way to make good smart decisions. Okay, so Gorbachev, the last ruler of the USSR passed away this week. So actual thoughts. Yeah, I mean, I think this was a real milestone. You go back to the 1980s. And Ronald Reagan, the who had spent his entire career being a cold warrior, saw the opportunity to basically do business with with Gorbachev.

Margaret Thatcher had told him that this a man we can do business with Gorbachev had come to power in 1985. He had initiated reforms of the Soviet system. He was a communist to be sure. But he introduced political reforms called gloss nose and economic reforms called perestroika. And Reagan seized the opportunity to go meet with him and they signed arms control treaty after arms control treaty and ended the threat of mutually assured destruction that the world had been living with since the beginning of the Cold War.

You got to remember that, you know, the Cold War began shortly after World War Two. And we had this doctrine of mutually assured destruction or mad and the whole world was living under the shadow of nuclear annihilation. This was showed repeatedly when I was a kid, there was a TV movie called the day after the day after it was scary.

Lord terrorized us that America we're all gonna die. We had Did you ever have nuclear bomb drills we had to get under your desk? Yeah, we have. Yeah. So if you're like our age, you remember this that that movie, by the way, that that was a TV event movie that was one of the most widely watched movies.

But there were others, you know, Jim Cameron used this concept in the Terminator movies. You know, it was something that people were really afraid of. And Reagan sees the opportunity thought fundamentally that nuclear deterrence was a moral that yet better to have deterrence than a nuclear war, but that he if he could, he sees the opportunity to negotiate the end of the Cold War.

And by the way, there were hardliners in his administration who did not want him to negotiate with Gorbachev. But they ended up doing a series of meetings. It culminated in 1986 at the Reykjavik summit, and they signed a deal to remove, you know, these these INF system deals now, and that ended the Cold War.

And then basically what happened is in 1989, the Berlin Wall came down. Gorbachev allowed the Western the Warsaw Pact countries to leave. And then in 1991, the Soviet Union collapsed. So, you know, he gets a lot of credit for being willing to reform that system. Now, the sad thing is, if we were fast forward 30 years later, where are we today, we're back in a new Cold War, with Russia, I mean, that we've been spending a good part of this year, talking about the threat of a nuclear use.

And, you know, this was a problem that we thought was solved 30 years ago. And now we're back with it today. And you've got to ask, have the successors of, you know, Reagan and, and and George Herbert Walker Bush, the people who inherited our foreign policy over the last 30 years, have they done as good a job as Reagan did?

Reagan ended the Cold War, we are back in a new Cold War. Why? What is the reason for this? There's been a a series of stupid policies that now have put the risk of nuclear war back on the table. My interest in Gorbachev is slightly different. He is an incredibly important character.

The second half of the 20th century, undeniable, you know, won the Nobel Prize, as you said, David kind of ended the Cold War. But the most important thing, in my opinion, was the precursor to perestroika. And why he did it. And as you said, like, you know, this is a fairly ardent communist, although he had really interesting views, like he ran a very kind of like, open, kind of Politburo where folks could debate and he, you know, promoted a lot of young people from within all of these interesting things.

But the most important thing and he's written about this a lot is the reason that he embarked on perestroika was because USSR at the time had an incredibly poor work ethic, terrible productivity, and horrible quality goods. And I think that there's something to be learned by that. Because at the tail end of communism, essentially, where you had central planning, central imposed economic principles, what happened, people did not feel that they had any ownership in the outcome.

No agency, no agency whatsoever. And I think that there's a really important lesson to observe there, which is that if governments get too actively involved, this doesn't just happen in Russia, it happens everywhere. It's happening in California, we just talked about it, it's happening where we live right now.

And if you look at then what happened afterwards, it became the aristocracy that basically ruled the USSR before, and then fighting against all these folks that wanted reforms. And that created the schism, which then perverted capitalists capitalism for you know seven or eight years through yeltsin until putin got there and that's what created the oligarch class and you know really exacerbated a bunch of wealth capture by a handful of folks that may or may not have deserved it and i'm not going to judge that but i just think it's really important to understand that he was forced to embark on this because of all of these state central planning policies and so it's just an important lesson for americans in democracy which is careful if you want more government you might get more government guys you're exactly right the soviet union their economy used to run on what they called five-year plans it was incredibly centralized it was all run by the government and you know this was communism and the 20th century the second half of especially was a giant battle of systems not just of countries not just the western bloc um you know led by the u.s the free world versus the soviet union the warsaw pact you know the u.s the free world versus the soviet union the warsaw pact was also a battle of philosophies and systems it was the philosophy of state control versus freedom and uh and a free economy and freedom won you know the free economy won in that battle and the crazy thing is 30 years later we're talking about socialism being a viable doctrine you have politicians basically saying that they are socialists but 30 years ago you would have been like that was there's an election and the point is example after example evidence well documented of just how it doesn't work.

And I guess the thing is, you know, we all say like, you just have to learn it for yourself. You know, like, you'll tell your kids to do it to not do something at infinite stove. Yeah, they got to touch the stove themselves and get burned. We're about to go do that in California.

Can you imagine if like people who want to be socialist here binders if they had to be in a food line or have rations, literally Russia had food lines, and they were rationing food in the 1980s. Like, well, yeah, just central God, yeah, a large driver of Gorbachev, basically negotiating these peace settlements with, you know, with Reagan and this nuclear, you know, demilitarization was in part because he knew he couldn't fight.

Right? It was this was collapsing. The class was collapsing. Yeah, he could not keep up. Reagan began an arms build up. And there was an arms race and they were losing. They were losing. They were losing. This is and this is why like people think people should not misunderstand what Gorbachev was.

He was not necessarily some democratic freedom fighter. He was a person who was observing the on the ground conditions of a socialist system, decay their ability to compete. And so he had to capitulate before it was forced upon him. Right? Right. This is why I don't think he deserves as much credit as as Ronald Reagan is because at the end of the day, Gorbachev would have kept communism going.

If he could have if he could have if he wanted the Soviet Union to stay together. I mean, he that's right. But his but I think to his credit, when the things start to collapse, he didn't use violence and repression to try and hold it together. So, you know, he was a he was a reformer.

He was a liberalizer, pragmatist, maybe, and a pragmatist and didn't use violence. But and ultimately, he was a partner for Ronald Reagan. Remember, Ronald Reagan began this gigantic arms build up, he was denounced as a cowboy who would get us in World War Three. But when he had the chance to negotiate a deal with Gorbachev, he took it and they basically got arms control.

And it was because Reagan was able to sit on top of an extremely productive capitalist system that allowed him to make those investments that made that capitulation. We have basically a fat to complete. And I think that that's another thing for a lot of us to understand, which is free market capitalism, removing these degrees of decision making give us degrees of freedom.

And I've said this before, on the last part, the great thing about the IRA and what Chuck Schumer did, is actually will be written in 10 or 15 years from now. Because when we get to energy independence, when every home is resilient, the national security calculus in America changes wholeheartedly overnight.

Yeah, I mean, think about our relationship years ago. Right, but I didn't cancel that. Okay, well, listen, no, it's true. If you're willing to use natural gas and fracking, America is one of the richest energy countries in the world. We produce a lot of oil too. Yeah. I mean, listen, it will change everything if we can really go all in on all of the categories nuclear.

It's just it's just the fossil fuels and the and the if you if you let the capital markets do and the free markets do what they're meant to do. They will empower the government to do great things for all of you. All citizens. I agree with 100%. And the reason we want to stop it is because we have a couple of examples of you know, extreme wealth.

And I think that's something we have to think about is like are the extreme is the extreme wealth created for a certain class enough to stop the prosperity train that we actually have in America. Listen, Jason, the politicians in California think they can run fast food businesses better than the people who own those those restaurants.

People have never worked in their lives. No, we have the great thing work. They wouldn't. Yeah. The great thing is we have a running a B test, which will show whether this state central planning can work or not. And again, if we refuse to want to listen to the examples of Russia, or all of these other countries that have tried this, then so be it.

We will know. In the next three to five years that these policies actually don't work and actually, that it actually accelerates the exact hellscape that they think they're trying to avoid. But you know, not only to my point about foreign policy, not only are we forgetting the lessons of this Cold War, the economic lessons, that a free enterprise system generates more wealth and prosperity, and more national greatness, more ability to fund a defense budget, create a better economy.

Not only does it do all those things we forgot, not only have we forgotten that, but also we have abrogated, we have ended every single defense control and arms control treaty with the Russians that Reagan and Gorbachev signed. Why? Why did we do that? Now our nuclear missiles are pointing at each other again.

And you know what? Russia's a much poorer country in the US. We're actually 15 times richer than them. During the Cold War at their peak, we were only three times richer than them, but we're 15 times richer, but they still got over 6,000 nukes. Why did we get rid of all those arms control treaties?

Why have we basically alienated them? Yeah, we talked, we said it before, like you're dealing with a pragmatist, and Putin's KGB agent is slightly different. Maybe you feel like Putin isn't someone we can deal with now, but he was someone we could have dealt with 10 years ago, 20 years ago.

We missed the opportunity to deal with him, Jason. If he was a rational actor, we would be able to deal with him. I think the only way he's actually going to be, the only way we'll be able to deal with him is if he doesn't have the oil market he has.

Like he just has too much power from that oil. And over time, that's the solution. We have to be energy independent. You know, I think Europe has learned that lesson harder than we have. Gorbachev was a communist. He was an heir to Stalin. And yet Reagan could still do business with him and sign an arms control treaty so that we could end the risk of mutually assured destruction.

We took advantage of- You don't have to believe, you don't have to believe that Putin is a good guy in order for us to avoid getting back into a Cold War, which is the situation we find ourselves in, now. How does it benefit us to have Russian nukes once again pointed at our heads?

Yeah, I mean- And the reason why, the reason why we alienated him, Jason, has nothing to do with him being a madman or whatever. It is because we brought NATO, which he views as a hostile military alliance, right up to his border. And by the way, listen to this video from Gorbachev.

Gorbachev was asked about NATO expansion in front of the US Congress. He was giving a talk to them and they asked him, Gorbachev, what do you think about NATO? And he said, I don't know. I don't know. I don't know what you mean. What did he say? He said that you cannot humiliate a country this way and expect there to be no consequences.

Gorbachev was against NATO expansion. When basically George Herbert Walker Bush and the Secretary of State James Baker went to Gorbachev to argue on behalf of German reunification. This is basically in 1990. Baker made the promise to Gorbachev not one inch eastward. Gorbachev said, yes, okay, they can reunify, but we do not want NATO moving up to our border.

Baker made that promise. We have brought NATO up to their border. That is why Putin regards us with hostility. Yeah, and I think Europe regards him with hostility and they're scared of him because he keeps invading countries. So yeah, there's takes two to tango. But hey, this has been episode 94.

It does. It does take two to tango. But you have to ask has the US foreign policy over the last 30 years that's gotten us in a new Cold War with Russia? Has that been a successful part foreign policy? They have undermined all the good work that Ronald Reagan and Gorbachev did together to end the Cold War.

We are back in a new Cold War. And you need to find Reagan. You just need to find a new Reagan. Putin has some blame. Putin has some blame, but so does the US State Department. So does the US State Department. And Europe. Europe has a big part of the blame too here because he's their neighbor.

Yeah. For the Sultan of Science, the Rain Man End, Reagan Library Chairman. Are you the chairman of the Reagan Library? Let me ask you this. When you were a kid, did you have a Reagan poster in your room? Have you ever owned a Reagan poster? Maybe a Stanford? I'm sure I've definitely owned a picture of Reagan and Ronald Reagan.

Listen, Jason, Ronald Reagan poster or a picture in your dorm at Stanford? Yes or no? Listen, Ronald Reagan. That's a yes. Hold on a second. Ronald Reagan won the Cold War without firing a shot. He gave us the greatest economy the US has ever had. He ended the inflation and stagflation of the 1970s.

And again, he avoided getting us into any of these major wars. Tell me the politician who you can have lunch with any of the politicians who you revere, who has a track record like that. Um, yeah, I mean, I guess one would say Bill Clinton, you know, would be the closest, you know, great president of our lifetimes, right?

You would agree with that? I think he was a good, good president, especially number two behind Reagan in our remember, he benefited from the economy that Reagan whatever reason you would agree with me, Clinton is right behind Reagan, Reagan and Clinton in since like 1950 something easily top two.

Yeah, I mean, easily, easily. I mean, it's hard for sacks to say that Eisenhower is very good. Listen, I mean, but head and shoulders, I think like for practically what they do at their point of time. Amazing. All right, listen, sacks. I know you love Reagan. And Reagan and Clinton.

You should play you should play Reagan and Nixon. Reagan and Bill Clinton one on each side of you for next week. Will you do that for us? I gotta go guys. I gotta go to I love you. Sassy. I love you. Love you too. Happy birthday. Thanks, bro. I love you.

Let your winners ride. Rain man, David. And instead we open source it to the fans and they've just gone crazy. Love you. I sweet. Besties are dog taking a driveways. Oh, man. I should all just get a room and just have one big huge or because they're all just like this like sexual tension, but they just need to release that.

Oh, you're the be what you're your feet. We need to get. Merch. I'm going. Oh, I'm going. Oh, © 2012 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Thank you. Thank you.