Balaji Srinivasan: role of decentralization, China/US breakdown & more

So we have Balaji here and obviously Balaji is an expert in everything but Balaji. You're used to being interviewed one on one. I've had you on my podcast a couple years ago. We had many great discussions. You've been on a bunch of other people's. But today we'll see how you do on the squad here with five people passing the ball. You've listened to the pod before.

Yeah, I'll pass. So 20% each or whatever. It's fine.

Okay, perfect. Well, I mean we will have all in stats. We'll do.

Good luck trying to get 20% with this moderator.

This ball says the guy who has the largest percentage.

Look, you're. You're supposed to be a non shooting point guard, Jason. Nobody wants to see you brick three pointer after three pointer. Just bring the ball down the court and pass it. Just pass the ball.

Just pass it.

Get out of the way, Jason. That's.

That's coming from the guy who has 24% of airtime, David Sacks.

I fit exactly what I'm supposed to be doing, which is 1/4. It's statistically proven.

Let your winners ride Rain Man, David Sachs.

And instead we open sources to the fans and they've just gone crazy with it.

Love you, Queen of Kinwa. Hey everybody. Welcome to another episode of the all in podcast. With us again this week, Chamath Palihapitiya, the dictator in just a great sweater. And David Friedberg.

You should touch this. You have no idea the material that it's made from.

It's made from like the.

The chin hair of like a baby goat. Baby goat that's then plucked by a Tibetan Sherpa who literally is forced to use lotion and camphor to keep their hands soft so that they don't disturb the innate properties of the thread.

It's amazing. And available right now. Two for one at Kmart. 14.95. I mean, I'm just going based on the aesthetics of the look. David Freeberg is back. The queen of Quinoa. Recently having his office hit by a skunk. Are you okay, David? Are you going to be okay for the show?

Be all right. Just getting. Getting used to the condition.

But you're on. You're on managerial. And did you get hit by the skunk or just your office got hit by the skunk?

Well, my windows were open. Apparently it's baby skunk season here in Northern California, so there were some baby skunks playing around. God, sorry.

And you're sure it's not your returns?

Oh, my God.

Too soon, Too soon, Too soon.

Way too soon. And let's move on from definitely too soon, and from a nondescript Motel 8 somewhere in Texas. In Texas.

Texas.

David Sachs, a coastal elite in Texas, on mute. You're on mute, David. This is episode 48. You can.

Yeah, I happen to be in Texas. That's correct. It happens to be a tax free state. No coincidence.

Happens to be a state where you can carry a gun now.

Yeah, exactly.

And women are no longer allowed to make decisions for their own body. So two out of three ain't bad, I guess.

What a great place to live. Ridiculous.

David, are you considering moving to the great state of Texas?

Well, I'm open to the possibility. Let's just say I'm open to it.

You're open to it.

But I. You know, I recently ran a Twitter survey where I asked Miami or Austin and Miami won by about 52%. Austin got about 48% with over 10,000 votes. It was pretty interesting.

And do you have a preference yourself between the two?

I personally like Miami. I already have a place in Miami, but I'm checking out Austin just for.

How close are you to 11?

Due diligence. Just for complete due diligence. So I think at this point, we should just go through the cities that Saks doesn't have a home. Can we just. That might be easier for us to narrow down. Sachs, possible location. All right, listen. People started haranguing us on the Twitter to have some bestie guesties on the program. And so we decided we would bring Balaji Srinivasan. Balaji Srinivasan. Did I get it correct? I mean, I've been pronouncing your name wrong for five years.

I mean, you're such a fucking ignoramus. You are such a racist.

Listen, Greek names are hard to pronounce. I mean, it's fine.

Balaji Street.

Sri Lankan names. Balaji. Everybody gets that, right?

Biology, Biology. Biology.

Oh, biology, Biology.

Srinivasa. Munatized Srinivasan.

Balaji. You've. You've listened.

Jason just figured out how to say Polyhapatiya.

So I have been training the world how to say Polyhopatia for years.

Sri Lankan names are the only names that are harder than South Asian names or South Indian.

Although Tamil names are pretty brutal.

I mean, yeah, yeah, Tamil names, basically, you guys add like maybe one or two more syllables, so I actually have to strain.

And ours end in a vowel. The. The Tamils always end in a consonant, which always. Just. Then you can just. They take liberal license to go on for another 20 minutes.

Can you guys just drop a few syllables from your names?

I mean, like, we could, we could, yeah, but we don't all intimidation thing.

Jamal.

Ball. Street. No Mat. All right.

There's a big tech backlash and it's not just because of David Sacks.

Comments.

A new poll shows that 80% of registered voters.

Wait a minute, wait a minute, wait a minute, wait. Before we go there, I have a question for biology. You are, in my opinion, but I think a lot of people would say one of the most incredibly well read, thoughtful, you know, commentators. Commentators that we have, frankly, like, you know, not just in tech, but I just think generally in our society. I would give you that. I think you're incredible. I'm curious, how did you become such a polymath? Was this just one of these things where you've always been curious about everything? Like, just tell us about. I'm curious about like how you grew up, first of all. And then second, how do you spend a normal day? I just want to know those and then, then we can just jump in. I'm just curious because I find you extremely well read and extremely knowledgeable.

Well, thank you. I appreciate that. You know, I, I try to learn from, from everybody. What do I do? I think normal people go to the club or they, they go out and have fun. And I, I read math books and history books and science books and stuff like that. That's how I have fun. I find that more interesting. Nothing wrong with, with going out. People do that. I go for walks and stuff. I work out. Um, but so I do a lot of that and I have, I, I mean, other than that, I just, I just read a lot and I, and I think I remember a moderate amount. And so I cite that and for people really much more complicated than that.

But that's it.

I think we call that a polymathetia.

The only difference chamath would be you if he could stop going to the club and he lost that last 40%.

I will make an observation which I was actually talking to Sachs about this, which is there's some people who are great at business and learn the tech because that part is necessary to put it together. And there's some people who are fundamentally like scientists or academics and then get into business in order to advance technology. And there's nothing wrong with the first group. And I think that's totally, you know, fine and legitimate, like business people first and then they get in tech. I'm really part of the second group, I think, where, you know, I'm fundamentally an academic at heart. You know, I spent almost the first three decades of my life meditating on mathematics and just kind of got into tech relatively later in life than. Than many others.

All right, and you spent your career building companies. Everybody remembers Earn.com, by the way.

That's actually doing extremely well at Coinbase. Coinbase Earn is on track for 100 million revenue. Actually, it's much more than that in terms of GMV. It's broken out separately in their. Not their S1, but their quarterly filing. So you can go and check me on that. And the other assets that we added after I joined Coinbase are more than 50% of Coinbase's revenue, again in their filings. And Coinbase custody and all of its assets come from Rosetta, which is something that we did there. And we launched USDC when I was there, and that is whatever, $100 million a day. So they got a lot of value out of that acquisition.

Just.

And you were the CTO for a while of Coinbase, obviously. What was your take on Coinbase's lend product? The SEC coming in and saying, hey, pump the brakes. We want a bunch of information. And then they've just. Brian Armstrong and Coinbase announced that they're not going to do the lend product. What's your take on that?

So I don't speak for Coinbase anymore. Okay. I'm, you know, in my personal capacity. But I do think that this is sort of the beginning of an era where we're going to be rolling back the Alphabet soup that FDR put in place. That is to say, the SEC is not set up to go after millions of crypto holders and developers. They're set up to go after a Goldman and a Morgan. Just like the FAA is not set up to go after millions of drone developers. It's set up to go after Boeing and Airbus and the FDA is not set up to go after millions of biohackers. They're set up to go after, you know, Pfizer and Merck. So the entire 20th century Alphabet soup, that regulatory apparatus is meeting something that it's not really set up for. And it's going to be. It's. The problem is not. The problem is not any one actor like Coinbase or Kraken or what have you. Their problem is that technology has shifted and they've got many more people to deal with, and many of those are individuals who are more risk tolerant than companies. So. So I don't think they're going to be able to maintain the status quo of 100 years ago, the statutes that they're citing, I think that's going to either get knocked down in court or going to be technologically invalidated. There's going to be sanctuary cities and states for crypto or there's going to be international entities like what El Salvador is doing in Switzerland. So I don't believe that that era is going to maintain, but I think there's going to be a big conflict over it. So we'll see.

How do you think it's different this time though, Balaji, to the like crackdown? Because folks said the same thing going into kind of the Napster era when you know, everything was basically peer to peer sharing of media files that were technically copyright and there was, you know, some regulatory regime that, you know, had oversight over that copyright. But then the DOJ got wrangled in and they went in and they made an example out of arresting a couple hundred kids, I think. And it basically caused everyone to back away entirely from the market. Similar to kind of what we may be seeing happening in China right now. But is it not possible that we see a similar sort of response this time around where they kind of take this targeted, make an example approach to kind of share people, scare people kind of out of the frenzy that's I think, driving a lot of people onto these platforms rather than going after the platforms themselves. So kind of saying, look, this is a violation of security laws. You guys are getting prosecuted. Here's the hundred examples. And suddenly 80% of the attention kind of gets vacuumed out.

Yeah, so I'd say a few things about that. First is, I think 2021 is different from the year 2000 in the sense that China is an absolutely ruthless and very competent state. Whereas the US Government I would consider it's a difference between lawful evil and chaotic evil. Do you guys know that from Dungeons and Dragons? Okay, so the Chinese government is lawful evil. They are very organized and they plan ahead and when they push a button they just execute like, like this whole of society and they don't leave round corners or things Left out. The US government is today in 2021, not the 1950 US government. The 2020 US government is like this shambolic, chaotic mess that can't really do anything and is optimized for PR and yelling online. And that's a whole important topic. But to your. So. So that's one thing where I think there's a difference in just state capacity. But that's not to say that they're not going to try with what They've got the other thing is that. So to your Napster point, there was thesis and antithesis, but there was synthesis. That's to say, you know, Napster led to Kazaa and Limewire and actually the Kaza guys went and did Skype. So something legit came out of that. But the more important or more on point thing is it led to Spotify and itunes. The record companies were forced to the negotiating table.

There was a, there was a waypoint there that's important, which is that when that happened in Napster, we, we ran a company called winamp and it was part of aol. The biggest architectural flaw of Napster was Whip Salama's ass. Yeah. And, and well, the biggest problem with Napster was that it was, it was not fundamentally peer to peer. And so there were these servers. And so you know, the, the simple software architecture decision that somebody had to make was okay, well let's just make a entirely headless product that basically is fundamentally peer to peer. And that's what the Nutella source code was. We actually released that on AOL's servers without them knowing. It took them a few hours to figure this out. They called us, we shut the whole thing down. But in those few hours it was downloaded about five or six thousand times. All this open source code that we put out, that was the basis of Limewire Bearshare and that is what basically just decapitated the music industry. And it was there that then the music industry realized we needed a contractual framework to operate with these folks because they'll just keep inventing technology that makes this impossible. And then that's what itunes was able to do with a 99 cent store. That's what Spotify was able to do after that. But a lot of it started was because of what Balaji said earlier, which is that technologically people just will continue to push the boundaries. And we did that in music. And I think that's a lot of why the industry looks the way it does today.

But ultimately the, the, the premise kind of resolved back to centralized systems. Right? I mean like think about, you know, the Napster concept. It was really supposed to be true peer to peer file sharing and it ended up becoming the itunes store where everything sat on Apple servers.

And they ultimately that's the reflexivity because like what happens is all of these folks, you know, you're sitting at Warner Bro or Warner Music or Universal Music Group, you're seeing an entire industry that was worth probably 20 or 30 billion dollars just getting completely decimated. And then there's this psychological thing that happens where first you want to shut everything down, but then because there's this other thing that is even more evil and even worse and uncontrollable than the thing that you hated, then you actually say, well, listen, my enemy's enemy is my friend. And so then you say, well, fine, let's find a few partners to work with and we can try to find a way of living with these technologies. And that's going to repeat to your point, Balaji, crypto is probably now where we're going to see it play out first, because that's probably the most important intersection of individuals desire and a regulatory framework that's outdated, where the SEC has some extremely complicated questions it needs to answer. Especially even after something today like if you're sitting inside, you know, the SEC and all of a sudden you see that, that China, an entire country that basically was where an enormous amount of this crypto activity started and originated and was happening, can completely turn something off. What is our position as a government and as a society? We don't know.

Well, let me just fill everybody in for a second who don't know what happens on the taping. Today, September 24th, Chinese government has announced that doing any transactions in cryptocurrency is now illegal. Holding it, apparently you can still hold it. And this comes after bitcoin servers being kicked out of the country. So yes, they've pushed the button. Go ahead, Balaji.

To Friedberg. I would say BitTorrent is what kept the record industry honest and that kind of forced them to the table of itunes. To Chamat's point also, I wouldn't call it more evil, I'd call it more good. And BitTorrent also lurks out there as kind of this peer to peer enforcer that it's a check. Exactly. And it's not gone. And in fact it's a basis for new technologies. And I think this is another flare up. The other thing is that with crypto, the upside, even though the state wants to crack down on it harder, the upside is also greater. And the global Internet is bigger. And so I think the rest of world, meaning all the world besides the US And China is a huge player in what is to come. That's India, but it's also, you know, Brazil. It's every other country that's not the US Or China. And so that's a new player on the stage. And then third, to Chamath, to your point about, yes, China banned crypto can do it. Well, you know what's interesting is people talk about China copying the US nowadays. Actually in many ways, especially on a policy front, the US is copying China without admitting it, but it does so poorly. For example, lockdown, okay? The Chinese lockdown, you know, was something where it wasn't just sit in your rooms, it was something with like drones with thermometers and central quarantine where people were taken from their families and centrally quarantined and a thousand ultra intrusive measures that the population by and large complied with. I mean, forget about a vaccine mandate. We're talking about like you can see all the videos and stuff from, from out of China. The government itself is published.

Yeah, they didn't seem real at first.

They were, they didn't seem real at first.

Right.

And so, you know, the thing is that for the US to follow that, it's a little bit like as a mental image, imagine a lithe Chinese gymnast going and doing this whole gymnastics routine and then a big, you know, lumpy American following and not being able to do those same moves. Right. The Chinese government, you know, is, is as I said, lawful, evil, but they are set up to just snap this, snap that, do this, do that. The US government is absolutely not and the US people are not whatever you do.

Also our system is a democracy, is it not? Like, so you cannot just do that even if the government want to weld people into their homes. We have a democratic state here where we have to discuss these things and there's a legal framework to it.

So yes, Even in the 1950s and 1940s, 1930s, the US was still a democracy, but it basically managed to exert a very strong top down control on things. Today we have something for where, for a variety, like you know, under FDR or in the 50s, a very conformist society which was able to kind of drive things through even though it's a democracy. It was something where mass media was so centralized that a relatively few, relatively small group of people could get consensus among themselves. And then what they print in the headlines, I mean, who's going to go and figure out the facts on their own? This gets into the media topic later. So it's de facto centralized at the media level, the information production and dissemination level, and then you kind of manufactured consent from there. Today it's, you're combining that democratic aspect, the legal aspect, with a new information dissemination thing, which is destabilized, I think, a lot of things.

Sachs, what's your take?

Yeah, well, I'd love to get Balaji's take on an article that came out this week in the Wall Street Journal. I think it was a really important article, came about four days ago and it was entitled Xi Jinping Aims to Rein in Chinese Capitalism and Hu to Mao's Socialist Vision. And the article describes how we've all seen and talked about on this pod, how they've been cracking down on tech giants, have been cutting down their tech oligarchs down to size, like Jack Ma, how he disappeared under house arrest. And, you know, and we've seen that, you know, they stopped the ant ipo. But this article went beyond those steps and really talked about Xi's ideological vision. And what it basically says is that what's going on here isn't just the CCP consolidating power. They actually want to bring the country back to socialism. And what they say is that within the ccp, or at least Xi's view of it, capitalism was just something they did as an interim measure to catch up to the West. But ultimately they are very serious about socialism. And reading this article, I had to wonder, well, gee, did we just catch a lucky break here in the sense that, look, they're abandoning, or if they abandon the thing they copied from us, which is market based capitalism, they use that to catch up. Maybe this is the way that actually this is the thing that slows them down. And the thing that historically that it brought to mind is that if you go back into the 1500s and you compare Europe to China, the Chinese civilization was way ahead. I mean, the standard of living was way ahead. Technologically, it was way ahead. Europe was a bunch of squalid Warrington tribal nation states. And then what happened is a single Chinese emperor banned the shipbuilding industry. Any ship with more than two masts was banned. And so exploration just stopped in China. They became very inward facing, whereas the European states explored and discovered and conquered the New World, colonized the world. And that led to an explosion of wealth and innovation. And as a result, Western Europe and then its sort of descendant of the United States ended up essentially conquering and dominating the modern world. And so I guess to bring it back to my question, topology, is there a chance that what Xi is doing, returning to socialism, could this be like the Chinese emperor who banned shipbuilding? Or am I reading way too much into this single Wall Street Journal story?

So my short answer on that is I think it is. I think the socialist thing is real, but I think it's better to call it nationalist socialism with the implications that has. Whereas I think the US is kind of going in the direction of what I've called maybe socialist nationalism, where it's different emphases in terms of what is prioritized. And I think in many ways China is the new Nazi Germany woke. America is like the new Soviet Russia, and the decentralized center is going to be the new America. I can elaborate on that. But basically, with respect to this, one thing I try to do is I try to triangulate lots of stories. So rather than, for example, and nothing wrong with a Wall Street Journal, you know, piece, like looking at it. But for every WSJ piece you read, it's useful to get like, you know, what is CGTN or Global Time saying, even if you discount it, just to see what they're saying. And then you also triangulate with, let's say the Indian or Russian point of view. And by doing this, you, I feel that it's better than just reading 10American articles and, you know, especially reading primary sources. Like there's this good site called Reading the Chinese Dream, which actually translates primary sources. And then you can kind of form your opinions from that versus like, like a quote, hot take, right? I'm not saying you are. I'm just saying that that's what I try to do.

So I think we've really gotten China right here. I mean, I think that if you, if you look at what's happening, I think we've, we've basically forecasted this orchestration of essentially the re. Vertical integration of China. You know, we have China Inc. Where the CEO is Xi Jinping and where there is a. It's, it's, it's almost like they've, they've changed the game, where what they are playing essentially is like settlers of Catan or something, where the goal is just to hoard resources. And I think that they have enough critical resources for the world. And the clever part of what they did was the last 20 or 30 years, they leverage the world to essentially finance their ability to then have a stranglehold on these critical resources, whether it's ships or whether it's rare earths or other materials. They leveled up, and I think that was the genius. Yeah, they leveled up on our capital.

Yes.

And now that all that infrastructure is there and now that we are addicted to the drug, they can then change the rules.

They leveled up with our operating system. It was a brilliant move.

But they allowed entrepreneurs to believe that they could be entrepreneurs. They allowed an entire society to basically level up.

Why did nobody see this coming? Chamath, Nobody saw this coming. People were starting venture firms. Look what they Were taking companies public.

They did Belt and road while we did nation building in Iraq and Afghanistan. Right. I mean, what is Belt and Road? Belt and road is their ability is they're creating ports and super highways to extract the resources that Chamath is talking about and bringing them into the Chinese system. And what did we spend our trillions on nation building in Afghanistan.

I mean, why didn't we see this coming? Everybody was looking at China, starting venture firms there, you know, embracing it, taking companies public, Wall street, politicians. Nobody saw this coming.

The rising Tiger story has been around since the late 90s, right?

No, no, I'm talking about why didn't.

We see them cutting the heads off entrepreneurship they spent. Because it was not about white people, people. China was in Sri Lanka. China was in Africa. These are not sexy, interesting places. Western audiences, they could, you guys couldn't give a. Let's just be honest, okay? And so that's why it didn't matter, because you. We thought, we all thought that these are countries that are sort of, you know, squalid, third world developing nation states that don't really matter. They don't necessarily have the resources that matter. But what did China do? They. They realized that those folks are the future gdp, those folks are the future population pools, the young that can actually do the hard work. And then they went and they secured again.

So not only for resources now.

So that's one thing. Hold on. So that's one thing. I think we entirely missed it because as David said, the military industrial complex doesn't look at, you know, a developing nation and say we want to be there. It looks at Afghanistan and says we want to dominate it because we can actually feed off of that domination. So that's one thing. The second thing is that I think that we misunderstood Xi Jinping's ambition. And I think that that's a reasonable mistake to have made. The first one is an error of just complete stupidity. The second one is something that I think it was legitimate to have missed.

And to your point, Chamath, they not only stole the entrepreneurial playbook, but the colonizing other places and giving them debt and giving them resources and building pools, ports in other countries.

We thought it was dumb. Let's all be honest. You know, 10 years ago, no, we did it.

No, in the UK did previously. I would argue in a lot of cases, we benefited. So China set up and bought like the largest pork production company in Australia. And what do you feed those pigs? You feed them soybeans. And where do those soybeans come from? Largest soybean exporting market is the United States. You know, we had a tremendous customer in China as they expanded their consumption pattern through all of this investing they were doing worldwide. We were exporting John Deere farm equipment and Caterpillar construction equipment and soybean products. And there was a. And our knowledge industry and there was a tremendous service model. And globalization really created. Call it a catch 22 for the United States, where we were watching the rising tiger, fueled in part by this kind of distributed entrepreneurism. But as that distributed entrepreneurism creates, you know, obviously the social.

Do you think there was an equal amount of dollars that went into western developed nations from China as it went into third world countries?

No, but it's hard to.

Most Western nations couldn't give a shit about that.

Money is too hard to turn down.

There's a mistake in our thinking with respect to the rest of the world that we've been making. We make over and over again. And it was all kind of predicted by a historian named Samuel Huntington at Harvard in the 1990s. He wrote a book called Clash of Civilizations. This book was written at the same time that another famous book came out called the End of History and the Last Man. And what the common belief was in the 1990s in the US was that we had reached an end of history where every country would become democratic and capitalist. That was the end of history is democratic capitalism. And we believe that the more we went all over the world spreading our ideals, it would hasten this day where they'd all become democratic capitalists. What Huntington said is no, you know, cultures and civilizations, these go back thousands of years, these are stubborn things. And what these other cultures really want is not westernization, but modernization. And what they're going to do is they're going to modernize. They're going to learn from us as much as they can about technology. They're going to assimilate and adapt and take all of our technology. But they are not going to become like us. They're not going to westernize. And that is basically what's happened over the last 25 years. And so the Chinese have caught up to us and suddenly we realize, whoa, wait a second. They have not westernized. They are still their own unique civilization.

Correct.

They have basically the equivalent of a modern day emperor. And they have no interest in westernizing. And we're like, what have we done? Because now we've allowed them to catch up from a technological standpoint.

Balaji, why did everybody in the west get this so wrong?

Well, so a Few things. One is political differences aren't public in China, but they are real. So it's, it's all the backroom stuff. And there was a real leadership shift from Deng and Jang and Hu to, to Xi. You know, the Mao era was revolutionary communist. The Deng Zhang Hu era was internationalist capitalist. I think that was real. And the Xi era is nationalist socialist. And it's just different. Like who did not fully control the military the way that Xi does. There's this ad you guys should watch, the Chinese military ad called like we will all be here or something like that. And the thing about it, it's not just that it's like extremely well coordinated military parade and set to be intimidating and so on, it's that the whole thing clearly just falls up to one guy, Xi. It's not him riding in a car with the rest of the Communist party flanking him as an oligarchy. It's just like one guy, this 2 million person army folds up to him. That is a true consolidation and roll up of power that he was able to accomplish, among other things, with tigers and flies going and throwing Boji Li in prison, you know, having generals, you know, thrown in prison for whether they were actually corrupt or whether they simply, you know, dissented or were. Yeah, yeah, it's, it's hard, it's hard to know from the outside, you know, in one sense because so many folks in the Chinese government were taking bribes is almost like an equity stake in their province, you know, like coming up, they're like, hey, you know, hey, Grew. So you know, give me a cut. A lot of people were vulnerable, so he just consolidate. So it's not something, you know, people will say, oh, you know, the Chinese plan for a hundred years. They don't plan for a hundred years. They had this huge war in the 20th century between the Nationalists and Communists. The Ding, the Ding transition, you know, his triumph for the Gang of Four, that was not something Mao had planned. They're human beings like everybody else and they had a real leadership transition after three hours of continuity.

Then this is what I think this is the key point you're making, which is, I think the reason that this actually flipped and we didn't see it coming is because Xi Jinping decided, I want to have complete control over the country. These other people are getting too powerful. And we're actually reading into this that there's some crazy plan. It just could be a crazy man, not a crazy plan.

I really disagree with you.

Why? Explain. I mean, he just decided, he just decided to Basically, take away every entrepreneur's company.

They were not trying to do. They were doing all of this stuff in plain sight. Okay, as an example, you know, we view Sierra Leone as a place where we make commercials about, or we try to fundraise for, or we send usaid. They view Sierra Leone as a place where there's critical resources that are dependent on the. That the future of the world depends on. And so they will go, they will modernize, they will invest, and they will then own those critical resources. View. We view Chile as a random country in South America that abuts, you know, Peru and Argentina. They view Chile as a place where you. Where there is the largest sources of lithium that we need for battery production in the future. They were doing this for decades right in front of us. And the reason we.

The cutting of capitalism off, the reason.

We didn't pay attention, is because none of those countries mean anything to us.

Okay, So I agree with Chamath. And the thing is, though, I argue that the blindness actually comes from both ends of the political spectrum. Like on the conservative end. Oh, these are shithole countries, basically. You can bleep that if you want, but Trump said it. It's something where, for example, Covid was only taken seriously once it was hitting Italy and France. China was still considered a third world country, but it actually also comes from the liberal side in a different. Like, it's slightly masked, but it's a condescension of not the military industrial complex, but the nonprofit ngo, you know, complex, like, oh, the white savior with the NGOs you know, coming in and, you know, you know, pat them on the head kind of thing. They're not a big deal. And the thing about this is, like, the one thing I think is a huge thing for our diplomatic core today is making any generalization about another culture which says that they're not completely good or that they have some aspect to them that doesn't match exactly to the US you can be called a racist for doing that. And so this is.

I mean, look at the criticism of Islam. I mean, if you criticize Saudi Arabia for throwing gay people off of buildings, you're not respecting the religion.

You say that biology just gave the most precise delineation that I've. So I. Let me just repack this what you said, because it resonated with me. Western philosophy tends to view countries in three buckets. Bucket number one are countries like us, right? Those are the other western countries, the G8 countries. They feel like we're aligned. And then what happens is, you get this weird thing where then you move into like countries where you basically either deal with it with wokeism, right? Oh, let me go pat them on the head, let me go try to save them because it makes me feel better. Or you deal with them as neocons, where it's just like, let me go dominate them and take them to war. And literally you can take all 180 odd countries in the world and effectively sort them into those three things. And that I think is the problem with, with the America's view of what we're doing. And so what David said is really true, which is that while we were doing this, we had neocon war, Wokeism, or ah, you're our buddy because you're like us. The entire world reordered itself with completely different incentives. And they did it right in front of us. And now we wake up to realize, oh my gosh, that was an enormous miscalculation that we just did.

Yeah. So, you know, if you look at kind of the history of the west interaction with the rest of the world, and let's talk about colonialism. And whether you're talking about colonialism over the last few hundred years, or even you talk about a microcosm like Afghanistan over the last 20 years, I would argue that there's three phases to the west interaction with these other cultures. Phase one is sort of domination, right. Like Chamath was saying. Phase two is assimilation, where the culture that's been dominated realizes that they're behind and they want to catch up. And so there's a process of Americanization, Romanization. And what they're doing is they are learning from us and taking our technology and it lulls us into a false sense of security that we think they're becoming Americanized or becoming Westernized.

Right.

It's not alignment, it's just they're trying to catch up. Then the third phase is reassertion, where the dominated country, culture, what have you, reasserts its traditional culture and its traditional views because they've modernized, but without becoming truly becoming Americanized or Westernized. And we are caught off guard by that. And we don't really realize that they never really wanted our culture. They just wanted to throw off, you know, American domination or Western domination. And so what they've actually done is use this period to basically assimilate and catch up. And the reality is, like in Afghanistan, they don't have to fully assimilate all of our technology. They don't have to become as strong as us because we are in their land. They Just have to become strong enough to basically achieve a sense of upgrade their systems.

Right?

They just have to achieve a defensive superiority. It's not an offensive capability. So it's much easier for them to catch up than we think. And we are always caught off guard by this dynamic. And it repeats itself over and over again. And what you've seen in China is 30, 40 years ago, you had the great economic reformer Deng Xiaoping. He laid out what they had to do. He said, bide your time and hide your strength. Hide your strength under a bushel. That was the great motto by Deng Xiaoping. He set that policy for 30 or 40 years. They embraced basically perestroika without glasnost. They reformed their economic system. They copied us, but not making Gorbachev's mistake of giving up any political control whatsoever. And by 2012, they had largely caught up. And so I would say that XI was not an aberration, he was a reassertion. They had gotten to a point of strength where they were ready for that strong leader who was ready to reassert their, basically their ethno nationalism. And that's the point we're at right now. And once again, we've been played for fools and caught off guard.

Friedberg, I mean, one of the signs was his corruption crackdown a few years ago, right? I mean, that was kind of step one where he took all these provincial managers and kicked him out and put him in jail and started to, you know, clean things up internally where there was clearly kind of corrupt behavior underway. But, you know, I'm a couple points back. I do think it's worth highlighting that. But to some degree you can kind of try and diagnose his motivation or diagnose the motivation as being rather not too surprising and maybe not too nefarious in the kind of power grabbing sense which I think we all kind of want to bucket it as. But if there's a population like we're seeing in the United States, where when you loosen the screws on liberalism and you kind of allow more freedom to operate and more kind of free market behavior, you see tremendous progress. And as I think we've talked about in the past, tremendous progress always yields a distribution of outcomes amongst the population. But everyone moves forward. Some people just move forward 10 times faster and farther and it causes populist unrest. We've seen it in the United States. If aoc, Elizabeth Warren and Bernie Sanders were elected to be the triumvirate that ran the United States today, they would probably say, let's end all, you know, this capitalism that's creating all this wealth in the United States and progress generally would slow down. And I think that there's been inklings of that. Clearly there's data to support the inklings of this in China that indicates, you know what, the loosening of the screws has allowed tremendous progress, but it's time to tighten the screws because populism and unrest is going to arise from kind of perceived inequality, just like we're seeing in the United States. And, you know, I guarantee or I can't guarantee, but I would assume that if certain populist leaders in the United States had the same level of authority that Chinese leaders do, they would probably act in the same way.

I think what we're going to see next is, and I think we should talk about what we think will happen next with China. I think China's on the brink of having a revolution. If you look at what happened to the Uyghurs, obviously you can't practice religion there. Students in Hong Kong can't protest. You can't publish what you want. Founders can't start companies now. You're not going to be able to play video games as much as you want. You can't use social media. And today you can't have any control over your finance. If you squeeze people across this many vectors this hard, this quickly, I think Freeberg's right. It could result in massive.

China's not like a uniform people and a uniform culture, of course.

Yeah, but I mean, I'm just listed like seven or eight things they're doing to.

But there are, but there are many, many provinces, many cultures, many differences, many differences of experience, by the way. I mean, you know, the rural population in China doesn't experience much of what I think is driving industry and driving this inequality and perceived inequality and the changes that are underway. I don't think that a revolution is generally supported unless you have, you know, enough kind of concentrated swell across the population. I don't know how you could see something like that happening in as diverse a population as China.

I support China's limits on social media use by children.

I could.

I could use that here for my kids.

Clearly, Sachs is letting his kids use whatever they want. I mean, we definitely need to have some of those over here. Balaji, what do you think is going to happen, worst case, best case for China in the next two decades?

Well, so one thought I wanted to give is basically that in some ways this is inevitable because China and India are 35% of the world. Asia was the center of the world. And one way of thinking about it is that America and the west executed extremely well over the last couple of centuries, and Asia didn't with socialism and communism. And now that they've actually got a better Os, it's not like the US really could restrain them. So in that sense, that's also part of their internal narrative in a way. I mean, of course Mao killed millions of people there. They screwed up their own stuff. But their narrative is they were colonized by the west and the Opium wars are patronized as copycats, emasculated on film for decades. They're like heads down in sweatshops. They built plastic stuff, they took orders from all these overseas guys, and now it's their time to stand up and take back their rightful position in the world. And that's like, that's their narrative. And so it's important to not. Not agree with it, but at least understand where it's coming from. Because they want it more, I think. And so I disagree, Jason, with your, with your view that they're going to have a revolution. I think that's like, that's the kind of, that's a Western mindset where, you know, Australia, for example, is having these Covid protests. In China, the harder the crackdown, the less more crackdown, like, the easier it makes the next crackdown. It's something where it's not going to.

Be an easy revolution, that's for sure. But we saw protests. You saw Tiananmen Square, you saw Hong Kong, and you're going to see Taiwan.

That was 30 years ago.

It's still proof positive that if you squeeze people, they will take to the streets.

The quality of life in China has accelerated such a pace of over the past 30 years. The average person in China is so much better off than they were five years ago, 10 years ago, 20 years ago, 30 years ago. Revolutions don't come out of that amount of progress. Right? When, when, when your life, when you go from $4,000 a year in average income to $20,000 a year in average.

Income, what happens if they don't have jobs in the recession?

The only time you revolt is because of economics.

That's what I just said. So what happens if there's a. If they have a.

They're growing at 8% a year, the GDP is growing 8% a year, the population is seeing an incredible benefit.

What if that reverses? What if that reverses? Would you see a revolution then?

Well, J. Cal, I mean, look, I think we, to Balaji's point about this is like a Western mindset. I mean, think about the Arab Spring. We saw all those revolutions with the Arab Spring and we thought, oh, look, they're finally throwing off the yoke of oppression and now they're gonna set up democratic states. And what did we actually get? We actually got religious fundamentalism. Right. Like, we didn't get what we thought. And I think this happens over and over again. Is that, is that, you know, we're trying to superimpose our mindset on them. You know, we're thinking like, frankly, a Davos man.

Yeah.

No, I'm thinking like, people want security, by the way. And security, security can come in a lot of different forms, and religious fundamentalism is one of them. And, you know, the, the way that we see kind of government operate in China may seem foreign and uncomfortable to us, but it provides enough security to people to know they're going to have housing, shelter, food, medicine, and be able to do the things that they want to do to some extent in some limit. You know, it's. It's not necessarily an equation that says all humans that don't live like Americans are going to be unhappy.

Yeah.

Last thing I'll just say is basically, I think the idea that China will collapse from internal revolution or, you know, the US Military is, like, really strong relative to China, I think are both actually forms of wishful thinking. With that said, I do believe that we need a strategy for China on a global scale. I think the future is a centralized east and decentralized west. And. But, but I don't think it's going to be just, hey, deus ex machina is going to solve this problem.

No, I don't think the revolution is going to necessarily overturn China. I think you're going to see revolutionary moments.

Well, so just to say one thing in your defense, jcal, because everyone's kind of beating up on you.

Is beating up, by the way, just.

No, no, no.

Sachs is defending J Cal. What's going on? No, no, no, I want to.

I'm not saying it's a guarantee of revolution, but I think this is going to be. There's going to be some social unrest.

Yeah, well, look, the one way in which I agree with J. Cal is I do think that freedom ultimately is the brain birthright of every human, regardless of where you're born, who you are, what culture you are. But I think the thing that the United States has learned over the last 20 years is the road from here to there is going to be much more complicated than we think and longer and longer. And cultures are very stubborn things and they're not going away anytime soon. And the transition is going to have to happen within those cultures. It's not something that we can superimpose.

By the way, I would also point out freedom is the birthright and the want of a people that at some point have enough security to feel like they have that luxury. Up until that point, I think that you have to make the decision of does security give me more than freedom? And in a lot of cases, security coming with all the costs it comes with may give people more than absolute freedom. And that's a transitionary phase. I think a lot of peoples go through peoples being civilizations and states and whatnot.

Anybody have a prediction of what's going to happen in the next 20 years or we'll move on to the next?

I just can't believe Sachs was empathetic to your point. Jcal, that was, that was a great moment.

It's really insane.

I have a few predictions. I think actually if you read the Kill Chain or similar books, that's by, I think Christian Bros. It's a good book where basically he's like, the US military has a perfect record in its war games with China. China's won every round. And if you look at just the fact that with COVID the US military basically suffered a military defeat in the sense that it had this whole biodefense program it's supposed to protect against biological weapons that didn't work. Afghanistan, huge defeat, $2 trillion. You have this Aukus thing where it looks like France is now pulling off from NATO or the EU is doing their own thing. I think that China is. And then China's really already predominant in many ways in Asia and the US just doesn't care about the area as much. I mean, who wants to start another gigantic war over this? Certainly I don't think the people of America do after. After 20 years of forever war. And so and China really cares about Taiwan. They really care about their backyard. So whether that's a war or whether that's a referendum on Taiwan or whether it's some unpredictable event like Covid, I don't know. But I do think that China does have some Monroe Doctrine like thing that it gets to within Asia where basically it says just like the US said, hey, we're running this hemisphere. They're saying, hey, we're running this sector of things. Whether that's a military conflict where the US decides to just withdraw, I don't know. And then I think what has to happen is we have to figure out what the decentralized west looks like an asymmetric response to China, because it's going to basically be the number one centralized state in the world. You're not going to be able to combat it head on militarily. It's just, you know, it's got like 10x growth in front of it. It's already a monster. Unless there's some assassination or revolution or something crazy like that, that's hard to predict if it manages what it's got. It's got like, it's, it's like Google 2010. It's got 10 years of that in front of it. And whether it's a Chinese decade or a Chinese century, I think depends on whether we can build the technologies to defend freedom. Meaning like encryption, meaning, you know, decentralized social networks, meaning these kinds of things. Because that's only, I think, kinds of tools that are going to help us, whether it's drones, whether it's other kinds of things, asymmetric defense versus what they're going to be. It's not going to just be a deus ex machina.

Look, I think that's a great point to end on, Jason, because there's other stuff we want to talk about. So one of the things that Biology's commented on that I give him a tremendous amount of credit for is the idea of corporate journalism. In fact, Balaji, you're the first person I heard that term from. Corporate journalism, which is a recognition that all of these reporters actually are employees of companies and they have a company culture and they have owners. The companies do those owners often have an agenda. There's often a dogma inside these corporations. And it really got me to see journalism in a new light because these journalists portray themselves as the high priests of the truth who are there to speak truth to power. And actually they're really just kind of the lowest paid functionaries on the corporate totem pole. In contradistinction to what you've called citizen journalists who are people who are writing what they see as the truth in blogs or formats like this where they are not getting paid for it. We're doing it because we want to put forward what we know to be the truth. And actually I'd love to hear you speak to that because I think this is one of the most powerful ideas that I've heard you put forward.

Sure. So, so much I can say about this. The first thing I would do is I'd recommend a book that recently came out by Ashley Rinsberg called the Gray Lady Winked. And the reason it's very important. And I put it up there, frankly, with the top five books I'd recommend. I know I've recommended other books. Top five books I recommend. Great. Lady Winked. It goes back through the archives. The New York Times calls themselves the paper of record. They call themselves the first draft of history. They've literally run billboards calling themselves the Truth. But it's just owned by some random family in New York. And this guy, Arthur Sulzberger, who inherited it from his father's father's father. And so you have this random rich white guy in New York who literally tries to determine what is true for the entire world. His employees write something down. We're supposed to be believe that this is true. And I simply just don't believe that that model is operative anymore because I think truth is mathematical truth. It's cryptographic truth. It's truth that one can check for oneself. Rather than, you know, argument from authority, it's argument from cryptography. And you know, one of the things with Bitcoin, with cryptocurrencies is given decentralized way of checking on that. Now to the point about corporate media, it's, they're, they're literally corporations. These are publicly traded companies with financial statements and quarterly, you know, reports and goals and revenue targets. And so once you, you know, kind of are on the inside of one of these operations, you realize that that hit piece or what have you is being graded in a spreadsheet for how Many likes and RTs it gets on Twitter. And if it gets more, they're going to do more pieces like that, flood the zone with that. And if it doesn't, then they're going to do less. And they're all conscious of this. You know, for example, Nicholas Kristof wrote an article. I think it's like a, it's the articles no one reads or articles someone will read where you notice that his Trump columns get something like 5x more views than his other columns. It's like this huge ratio. And so at least some folks there are privy to their, to their page views. So and of course they're looking at their Twitter likes and RTs. Even if they, those are not directly page views. They're, they're certainly correlated with the pages on the article. So all these folks are literally employees of for profit corporations that are trying to maximize their profits. But we believe them when they mark themselves as the truth, like the nyt, or as democracy itself like the Washington Post, or fair and balanced like Fox. These people equate themselves with like truth, democracy and fairness. They weren't exactly around at the founding, okay, they weren't, they weren't part of the constitution in 70, 76, the post offices. But these media corporations were started later on and have kind of glommed themselves on and declared themselves like part of the establishment, you know, and, and they are not. And the last point, and I'll just, you know, give you guys the Floretches. But we didn't go and say, oh, BlackBerry do better, Blockbuster, do better, Barnes and Noble, do better. We just replaced them, disrupted them with better technological versions. And so the idea that, oh, New York Times, do better, that's completely outmoded way of thinking about it. We need to disrupt, we need to replace, we need to build better things. We need to have things that have, like on chain fact checking, that have voices from overseas, that have voices that are actually experts in their own fields, that are voices that are not necessarily corrupted by.

Explain what you mean by on chain fact checking. Give an example.

So this is a very deep area, but fundamentally the breakthrough of bitcoin was that an Israeli and a Palestinian or a Democrat and a Republican or a Japanese person, a Chinese person, all agree on who has what Bitcoin on the bitcoin blockchain. It is essentially a way of. In a low trust environment, but a high computation environment, you can use computation to establish mutually agreed upon facts. And these facts are who owns what million or billion of the roughly trillion dollars on the bitcoin blockchain. And that's the kind of thing that's, I mean, people will fight over a $10,000 shed, you know, when, when you can establish global truth over a byte which says, you know, do you have 20 or 5 or 10 BTC? You can actually generalize that to establish global truth on any other financial instrument. And that's tokens and that's, you know, loans and derivatives. And that's a huge part of the economy. And then you can generalize it further to establish other kinds of assertions and that gets a little bit further afield. But not just, you know, proof of work and proof of stake, but things like proof of location or proof of identity. There's various other facts you can put on there. So you start actually accumulating what I think of as not the paper of record, but the ledger of record, a ledger of all these facts that some of them are written by so called crypto oracle. Some of them arise out of smart contracts. But this is what you refer to. And as a today Model of what that looks like. It's sort of like how when someone links a tweet to prove that something happened, people link an on chain record to prove that something happened. Concrete example. Do you guys remember when Vitalik Buterin made that large donation earlier this year?

Yes.

Okay, so you're nodding. You want to talk about that? Explain what happened.

I think that you basically tweeted out something that was essentially trying to raise money to secure necessary equipment and pharmaceutical supplies to India during a pretty bad Covid outbreak. And then I think you, you decided that you were going to donate some money. And then Vitalik basically stepped up and actually gave quite a large sum. I'm not exactly sure the exact number.

Biology. Yeah. So it was, it was an enormous amount in illiquid terms of this meme coin, these Shibu coins. But the thing is that everybody, when they wanted to prove that this has happened because it was so unbelievable, such a large amount of money, he was marked at on the order of a billion when he gave it. Do you know how they proved it? They didn't link a tweet. They linked a block explorer like an on chain record that showed that this debit and this credit had happened. And the big thing about this is we take for granted when you link a tweet, you're taking for granted that Twitter hasn't monkeyed with it. But guess what? Twitter monkeys with a lot of tweets these days. A lot of people get disappeared. And so it's not actually that good a record of what happened anymore. This is deleted. This guy got suspended. You know, like even the Trump stuff, forget about like Trump himself. But that historical archive of what happened, you can't link it anymore. It's link rotted just from that. Like, I know it's one of the thousand most important things about it, but it's an important thing.

In the example of say Taiwan and China believing Taiwan is part of the one China concept and Taiwan believes it is a country. And everybody in the world has a different vote on that. How does the blockchain clarify what is the fact about is China a country or is it a province?

Very good question.

Doesn't have to.

Well, what it does is it clarifies the facts about the metadata. Who asserted that it was a country and who asserted that it was a province and what time did they do so? And you know, what money, how much BTC did they put behind that or what have you? So it doesn't give you everything, but it does start to give you unambiguous like proof of who and proof of when and proof of what and then from that at least.

Yeah, I mean like the way, the way I've kind of explained it to family members who've asked is, you know, the concept of a chain is difficult I think for people to that aren't, you know, have. Don't have a background in computer science to really grok is like. But everyone understands the concept of a database. You know, there's a bunch of data in there. Except in this case, the data that makes up the database is what's being verified by everyone and it's distributed so everyone has a copy of it.

I want to know what you guys think about this week in the Facebook dumpster fire. Let's move to something splashy.

And can I just say one thing? There's a book, Friedberg, on what you just mentioned which is called the Truth Machine by Casey and Vigna. And it gives a pop culture explanation of the ledger of record type concepts.

I just mentioned, which I don't think a lot of people grind yet. Balaji, to your point, and I think we're skipping past it, but it's a really important point which is historically databases have sat on someone's servers and whoever has those servers decides what data goes in the database and how they're edited and what's allowed to come out of the database. So in this notion, generally a database with information in it can be held by lots of people who generally as a group kind of vote and decide what's going to go into it. And that's the power of decentralization and how it changes, you know, the information economy which drives the world. And it's going to have a lot of implications. Right?

Facebook's worst month ever continues. We talked last week about Facebook having a internal leak called the Facebook Papers. This is a continuous leak to not only the Wall Street Journal, but apparently members of Congress are also getting it.

And the leaker and the sec and.

The SEC and the leaker apparently works in the safety group according to a congressperson who has been getting it and they are going to uncloak themselves and that they were leaking this out of frustration that there is human trafficking, democracy issues and obviously self harm in girls using Instagram and you know, this research. But that's not all. Facebook is admitting for the first time this week that Apple's privacy updates are hurting their ad business. And I think the story you're referring to is that two groups of Facebook shareholders are claiming that the company paid billions of extra dollars to the FTC to spare Mark Zuckerberg and Sheryl Sandberg from depositions and personal liability in the Cambridge Analytica saga. From the Politico article, quote, Zuckerberg, Sandberg and other Facebook directors agreed to authorize a multi billion dollar settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC's complaint, made subject to personal liability, or even required to sit for a deposition. According to the article, the initial penalty was $106 million, but the company agreed to pay 50 times more.5 billion to have Zuck and Sandberg spared from depositions and liability. Here is the money quote the board has never provided. This is from the group of shareholders suing. The board has never provided a serious check on Zuckerberg's unfettered authority. Instead, it has enabled him, defended him, and paid him. Paid billions of dollars from Facebook's corporate coffers to make his problems go away.

Chmoff I have one prediction. The Facebook whistleblower. You know, when you are a federal whistleblower, number one is you get legal protection. But number two, which people don't talk about much, is you actually get a large share of the fines that are paid by the act of your whistleblowing. There was a couple of SEC claims that I think were settled last year where the whistleblower got paid. I think like 115 odd million or something and just an enormous amount of money. And the SEC has done a fabulous job in using whistleblowers as a mechanism of getting after folks. And I think the SEC said they've collected almost a billion dollars since this whistleblower program started that they've paid out or something, just an enormous amount. And I had this interesting observation which is this person leaked a bunch of stuff or whistleblow to the Senate, to Congress, to the sec. There probably will be an enormous fine. This person may actually make billions of dollars, which will then make every other employee at Facebook really angry about why they didn't leak at first because all, I guess all this stuff was sitting around and apparently now they've shut it down. Right. So that entire data repository around this whole topic is no longer freely available for employees to peruse.

Oh, what, under a keytam thing?

Well, I think it was more like, I guess all of this data was sitting inside of some Facebook internal server.

No, I mean this leaker makes money under like key tam.

So the SEC will pay for information that results in a fine. And so they just recently announced that they paid out $114 million whistleblower payment. That was the highest ever. And that this whistleblower's extraordinary actions and high quality information prove crucial to successful enforcement actions. I don't think they announce all of these whistleblower payouts. They just pay them so they're not falling off.

That's my one observation is I actually think this whistleblower may make billions of dollars or more than any of us made at Facebook, which I think is hilarious. But the second thing which is more important is that there was an article in the Wall Street Journal about how sentiment amongst Americans have now really meaningfully changed. And Jason, I don't know if you have those stats, but this is a plurality of Democrats and Republicans where it's like 80% of anybody now basically says the government needs to check big tech.

The Wall Street Journal published an article yesterday highlighting a new poll conducted for the Future of Tech Commission. It found that 80% of registered voters, 83% Dems, 78% Repubs, agreed that the federal government, quote, needs to do everything it can to curb influence of big tech companies that have grown too powerful and now use our data to reach far into our lives. Findings are based on a survey of 2,000 or so registered voters.

I think it's a really, really, really tough road that these guys will have to navigate these next few years.

Can I offer some contrary views here?

Yeah, please.

So the whistleblower thing, real whistleblowers in my view are like Snowden or Assange, who are basically overseas or in prison for telling what the US Government is doing. And the difference is I'd say their whistleblowing, if accepted and acted upon, would reduce the power of the US Government. Whereas these kind of awards and so on, I think they do distort incentives. It's not like they're giving a billion dollars to Snowden for blowing the whistle on the nsa. The military industrial complex is not happy with that. But this money is being given because the government is currently mad at Facebook and wants to do something that is like a quasi nationalization of Facebook now, very similar to what happened in China where basically all the tech CEOs, they just do it much more explicitly there. They're just basically decapitate all them say, okay, you're going, you know, spending time with your family in the US it's done in this sort of denied way and so on. But the, the U.S. government gaining more control over Facebook is not a solution to Facebook's real problems. It's just going to mean backdoor surveillance of everything Every single thing that was pushed back on every end to end encryption thing that they implemented. Now the keystone cops in the US government not they don't just surveil everything, then their database gets leaked and it's all on the Internet just like what happened under the Sol Winds hack. So I'm not denying that there are, you know, like bad things about Facebook. I actually think on net it's probably being more beneficial than many people say. But I don't believe that the federal government is a solution to those problems. I think the solution looks more like decentralized social networking where people have control over their own data, not simply the US government quasi nationalizing the thing.

So, you know, people bring up this decentralized social network thing and as if it is a better solution. I think you believe it's a better solution. But I rarely hear anybody talk about, well, if there's slander on a decentralized network, if there's child pornography, if your personal banking information or you were personally hacked and that information was put on a decentralized social network, that cannot be reversed and stopped because it's decentralized, correct?

It depends. The thing is, it's basically about why does it depend.

You just said that the blockchain couldn't be changed and that all the facts were permanent. So why does it depend now?

Well, for something like child porn, for example, it's actually being used for that. You're not going to find lots of people who are running those nodes. It's something where edge cases are always used to attack something. There's a famous cartoon which says how do you want this wrapped? And it's called Control of the Internet. And it's either protect children or stop terrorists.

Right?

And so when you talk about an edge case like that, I mean the CSAM stuff, child porn, you know, that was, that's used by Apple to justify intrusive devices that are scanning everybody's stuff. The I think the answer to a lot of those things is if you're doing something that's bad, there's usually ways of going after it that don't involve this gigantic surveillance state that was after all only built in the last 10 or 20 years. Just normal police work that you can do if they're actually like, you know, a bad guy. There's other forms of police work. You can get search warrants. You don't have this completely lawless thing where you just, you know, some guy in San Francisco hits a button and you're digitally executed. And so, so, you know, it's not that there isn't any possibility for rule of law. It's just that it has to actually be exercised in this.

I think, listen, I think we're a long way away from decentralized social networking actually being the norm or being a solution. Jason. I think we're at the step of actually figuring out how much tolerance we have for probably specifically Facebook and Google's specific business models. And it's those business models that I think are coming up against privacy. They theoretically now, and we'll figure this out, may be coming up against mental health and, you know, our child welfare policies and what we all view about that. And those are fundamentally governmental issues that they should adjudicate. And I think the more important thing that I take away from all of this is that we've all kind of let it probably get a little bit too far. And I think now that there's a plurality, something's going to happen. I don't think it's going to be right. I don't think it's going to be just. It's kind of like trying to perform surgery with the rusty knife. There's going to be all kinds of.

Collaboration specifically to how to police Facebook, Twitter, social networks.

I think it's just like social media. I think we've jumped the shark at this point. And I think, folks, would you see.

Sensationalization as the solution, like biology?

I do think that that's the ultimate solution for two key things. One is the most important thing that we all want is to know what the actual economic relationship we're having with folks that we spend time with is. So when we spend time with friends, that's friendship. There's no economic relationship there necessarily. Okay. When we spend time with a lot of these applications, there is a subtle economic relationship that is actually hidden from us, which is that we believe we're getting value for free. But really what's happening is we're giving back a bunch of information that we don't know. When you move to a world of decentralization, you shine a light on how people make money and you allow us to vote. Do I want it? Do I not? That single feature will provide more clarity for people than any of this other stuff will, because it'll force people to then step into an economic relationship with these organizations. And I think that that's just fair because those folks should be allowed to make money, but we should also be allowed to know what the consequences are and then decide.

David, you are a big proponent of freedom of speech. We saw massive election Interference. The Russians trying to use social media to create division. Other countries doing it to each other. It's not just the US And Russia. It's China and Russia and everybody doing it to each other. Do you believe that something like election interference and those bots would be solved or it would get worse because of decentralization? Are you a fan of decentralization, or would you rather have a centralized Facebook, Twitter, and somebody responsible like Zuckerberg or Jack to mitigate this for democracies around the world?

Well, the problem that we have is we do have a problem of social networks spreading lies and misinformation. However, the people who are in charge of. Of censoring those social networks keep getting it wrong. So they allow disinformation to be spread by official channels, whether it's, you know, you know, whether it's corporate journals.

Are you gonna say doctor? You just say Dr. Fauci.

There's so many official channels that get things wrong. We talked last week, week about the Rolling Stone Ivermectin hoax. There's been absolutely no censorship of that manifestly wrong story. There's no labeling of it. But then a subjective opinion, like what Dave Portnoy posted about AOC attending the Met Gala, which can't be factually wrong because it's just him. An opinion that gets fact checked and labeled. It's bizarre. So the situation we have today is we're not preventing misinformation. We're just enforcing the cultural and political biases of the people who have the power. And that is always a problem with censorship. And this is why I agree with Justice Brandeis when he said that sunlight's the best disinfectant. The answer to bad speech is more speech. We need to have more free and open marketplaces of ideas, and that ultimately is how you prevent disinformation.

So decentralized Twitter, decentralized social networks. Do you think that is too much sunlight and too unruly, the fact that things could be spread on there and.

Well, I'd like to see what those things look like when we actually have them. I agree with Jamath that we're still some ways off from that.

Are we?

I mean, but yeah.

Can I say a few things on that?

Yeah, go ahead. Because I think we have these out there. Isn't Masterdone out there and other services out there, and they are contending with these very issues.

So it's happening. So this philosophy was not. Sorry, sorry, Balaji. I just say one thing before you go. But like this, this general philosophy is not novel. You know, the Internet and the word are being called. The tech platforms were meant to be the response to the undue influence that kind of Americans thought existed already in the media when they emerged in the late 90s. And you know, you can go back hundreds of years, like the state was meant to be the response to the church, and you know, the media was meant to be the response to the state and propaganda. And then the tech companies were meant to be the response to media. And you know, now we're talking about decentralization kind of being the response to tech. And at some point, you know, information accrues in this kind of asymmetric way and it becomes called that undue influencer. And that, I think, ends up becoming the recurring battle that we'll continue to see whether or not this notion of decentralized systems actually is the endpoint or is just the next stepping stone in the evolution that is this constant kind of evolving cat and mouse game of where does the information lie, who has control over it and who's influencing people, ends up kind of being, I think, the big narrative that we'll kind of realize over the next years of couple. Couple decades. But I don't know, Balaji, if it becomes the endpoint. Right. I mean, this feels to me part of a longer form narrative.

Yeah. So I think lots of things look cyclic if you look at them like this. If you look from the Z axis, it's more like a helix where you do make progress, even if it seems you're going in a loop. And so I think it's centralized. Then you decentralize and you recentralize. It's like the concept of unbundling and bundling. You UNBUNDLE the, the CD into individual MP3s, you rebundle into playlists. Right. And so with decentralized media, it's not purely every single node on their own. I think it's more like a million hubs and a billion spokes. And Jason, to your point, basically most of those hubs are not going to allow things that 99.99% of people think are bad, like CSAM, you know, as for other things like, you know, slander hack documents you mentioned, the thing is, current central arbiters will falsely accuse people of these things or enforce them in political ways. The centralization is actually also not a solution that's being abused, as Sachs points out. In fact, official disinformation early in Covid, which I had to basically beat back with a stick, fortunately got some of it out in time. But People said the flu is more serious, that travel bans were overreactions, that only Wuhan visitors were at risk, that avoiding handshakes is paranoid that the virus is contained, tests are available, masks don't help. You know, all that stuff the Surgeon General himself, you know, tweeted out, you know, people don't wearing masks. Right. Buzzfeed, you know, nyt, all these guys got this story wrong and then they rewrote history to pretend that they didn't. So that to me is a much greater danger when you have a single source of truth that's false.

So we're picking the least bad solution.

It's such a good point because I'm old enough to remember when biology was right about everything related to the beginning of COVID And I'm old enough to remember when in April of last year, I wrote a piece in favor of masks when the WHO and the Surgeon General and all these official channels were saying, don't wear masks. So the problem is with official censorship is that they keep getting it wrong. They keep getting it wrong. And I want to. Hold on. I want to bring up one more quick point. Okay, Jason, you mentioned foreign interference on Facebook. I would really encourage anybody who's concerned about that issue to look up. You can go look. You just Google the actual ads that were run by agents of the FSB on Facebook during the 2016 election. You can actually see the ads they ran. I want to make two points about that. Number one, the ads are ridiculous. They are, they are sort of like an absurd, you know, foreigners perspective.

They're memey with bad English.

Yes, bad English. And it's somebody who doesn't understand American culture's attempt to propagandize an American. And you look at it, it's so ham handed. Let me give you an example. It's like in one of them, they've got Jesus arm wrestling with the devil and it's Jesus saying that I support Trump and the devil saying I support Hillary Clinton. I mean literally, stuff like that, okay? It's utterly.

That's stuff you'd see at a Trump rally.

It's utterly absurd and nobody would ever be convinced by it.

The second thing, except for the people at Trump rallies.

The second thing about it is that when you actually look at the number of impressions that were created by the sum total of all of the so called disinformation of all these ads, it is a fractionally small if in testimonial drop in the ocean compared to the total number of impressions on Facebook. And so I'M not disputing the fact that somebody in the basement somewhere in Moscow perhaps was running some.

It was proven. It was like hundreds of people was.

Running some sort of disinformation operation that was running ads on Facebook. What I am saying is that when you actually look at the effect quantitatively and qualitatively, you realize that that whole story was massively blown out of proportion in order to create a hysteria that then justifies censorship, then justifies the empowerment by centralized authorities to be able to regulate these social networks with the effect that the people in power end up censoring in ways that do not support the truth, but actually just reinforce their own power. That is what the disinformation story is really about.

No, it's not. What it's really about, Sachs, is that Russia wants to pit people like you and me against each other. You're right leaning, I'm left leaning. And what they want to do is create this moment where you and I are fighting over this instead of fighting Russia. Russia has this as a strategy to demoralize us. And this is classic KGB technique. I suggest so battles back and forth between Americans so we don't fight against Russian authoritarians around the world.

I have no interest in fighting Russia per se. I'm not interested in picking fights with foreign countries.

You should want to fight against Russian interference.

Yeah, I'm also not engaging in a fight with fellow Americans. I'm attempting to depropagandize fellow Americans who've been led to believe that Russian interference in the election was. I'm not saying it didn't happen, but they didn't expect it happened, but they've been led to believe that it was a much greater threat than it actually was in order to empower centralized authorities to engage in censorship over social networks. So I'm trying to essentially deprogram an enormous amount of programming that's taken place. I do not consider that to be fighting with fellow Americans.

Well, I mean, the point is, you have the GOP recounting votes, even to this day, saying the election was stolen. And then you have, on the left, you have the Democrats saying Russia won the election for Trump. In both cases, these are probably factually incorrect.

In our last podcast, I cited the piece by Rich Leave Lowry, which he is the editor of National Review, speaking to conservatives, saying that this whole stolen election, myth. Yes, he called it a myth, is an albatross. It will do nothing but backfire on conservatives and Republicans. I think there are plenty of people who recognize that story to be what it is we're talking about something very different here.

I kind of just want to pivot forward a little bit, and I think it's a good question with biology on the line.

But, yeah, let's use biology.

Let's assume we move forward to this decentralized model where there isn't a central media platform that adjudicates content and makes it available to the users of the platform. So now, in a decentralized world, take YouTube, for example. YouTube has an application layer, which is the website we all use to access the videos. And there's a recommendation list that pops up, and then all the media that exists on the YouTube platform sits on some servers. And so the application is how I'm kind of selecting what media to watch. But that's kind of being projected to me because of the recommendations being made by Google and the search function, if you guys remember. I don't know if you guys are old enough, but, you know, in the early 90s, we were all on gopher boards and we were trying to find information, and it was a total cluster, right? I mean, there's just like, nowhere, no way to kind of find what you're looking for. And so search became kind of the great unlock, right? And Usenet and search became the great unlock for, you know, for accessing content on this distributed network that we call the Internet. Now, in the future, if all of the YouTube media is decentralized and sits on distributed servers and sits on a chain or whatever, what does the application layer look like? Balaji. Because how do you end up giving. Users are ultimately going to have to pick an application or pick a tool to help them access media to help them access information. And there has to be, to some degree, a search function or an algorithmic function that creates the list of what content to read, or they simply subscribing to nodes on the network. And that's kind of the future of decentralization, where there's no longer a search or recommendation function, but there is simply a subscription function. And I think that that, to me, is kind of the big philosophical question, because from a user experience perspective, people want things easy and simple. They want to have things recommended to them. They want to have a bunch of a list of things, and they click down the list and they're done. And I'm not sure most people, as we saw in Web 2.0, when there were all these like, you know, make your own website stuff, and you had RSS feeds and that all died because it was complicated and it was difficult and it wasn't great content for most people. They preferred having stuff presented to them. So do we just end up with like 10, 20, 30 subscription applications that create different algorithms and different kind of access points for the content, or are people just living in a subscription universe in a decentralized world when it comes.

To media, it's a great question. So I think first we have some vision of what that world looks like already. Because if you think about block explorers and exchanges and wallets and much of the rest of the crypto ecosystem, they are all clients to the bitcoin and Ethereum and other blockchains, right? So, you know, I wrote this post called yes, you may need a blockchain, where people have said, oh, blockchains are just slow databases. And that's like saying the early iPhone camera is just a poor camera. Yes, it was worse on one dimension, image quality, but it was far better on other dimensions, namely the fact that it was ubiquitous, it was always with you, it was free, it was bundled, it was programmable, it was connected to a network, and so on. And so blockchains, yes, they have lower transaction throughput, but they are 1000x or more on another dimension, which is the number of simultaneous root users. That is to say it's a blockchain is a massively multiplayer database where every user's a root user. That is meaning everybody can read the rows in the bitcoin blockchain and anybody who has some bitcoin can write a row that's a debit or a credit to someone else. Anybody with compute can mine blocks, okay? So it's open and permissionless. Similarly, for a decentralized social network, it would operate in a similar way. Whereas let's say something like Twitter or PayPal, the root password is not public, nobody can access it. And so what this leads to, to kind of continue. Your point is basically, I think there's basically been three eras of the Internet. The first was P2P, which was, you know, peer to peer. Right. And so individual nodes are point to point communicating, and that's FTP. And it's. It was telnet before ssh. Yep, yeah, exactly. Right. And so the great thing about this is open source is peer to peer. It was fully programmable. You could see everything right then because of search, because of social, because of the rise of the second era MVC model view controller. Essentially, many protocols like social networking or search are not efficient. If every node is pinging every other node, you can't ping every other node with the index of the web, you can't ping every other node with Facebook's entire social graph. When you go and message somebody, you want a central hub with their photos and stuff so you can just send a few packets back and forth. Right. And this led to the, you know, the last 15 years, these gigantic hubs, last 20 years, these giant hubs, search and social and messaging, two sided marketplaces, hub and spoke architecture. And these hubs have global state and they're highly monetizable. You can make billions of dollars off them as many of our friends have.

Right. By the way, the early peer to peer versions failed. Right. Kazaa guiced. I mean, you know, the alternative didn't really work out.

Right? Hub and spoke. Yeah, yeah, exactly. Right. So I mean BitTorrent did exist during this time. It's not like it was zero. But generally speaking this was the era of hub and spoke MVC dominance. And now we're into a third architecture which I call CBC Client blockchain client. And so desktop clients have a blockchain that they communicate with. For example, I have a wallet, you have a wallet on your client and then the bitcoin blockchain intermediates us. I debit and credit you.

Okay.

That's a different architecture than both MVC and cbc. It actually combines the positive qualities of both. It's decentralized and open source and programmable like peer to peer. But it also has global state and it's highly monetizable like mvc. So it combines the best of both worlds. And it has some something that's very new, which is not open source where it's open source code, it's open state, where it's open state database like open state means the backend is open also. So all the applications that get built out, essentially our clients, that same backend, that same Bitcoin or Ethereum or what have you backend and then you kind of exchange between them. And the true scarcity now comes not from locking in your users but from holding a currency. It kind of gets reduced, the IP gets reduced to its minimal viable thing which is holding that cryptocurrency and what you can do with that.

But so give me the, give me the media analogy, right? So where does the media sit? And how do I as a user have an experience on what media to view and to access? Like think about, because again, like just speaking in a layman's terms term for folks maybe to understand, you know, most people I don't think understand the dynamics of what underlies a social network as much as they understand the User experience of browsing YouTube. Right. So yeah, what is, what, what is my option in browsing the decentralized version of YouTube? What does that experience end up looking like in this decentralized world? Right. Who, who ultimate who ultimately adjudicates the algorithm that defines what my recommended videos are that I'm going to be accessing from these kind of, you know, different nodes.

Well, I think the idea is you can bring your own. You could pick one, there'll be a library of them.

Well, that's my point is like the picking function is what doesn't. Didn't work in Web 1.0 or Web 0.9. Right.

So we'll take a, take a look at. So first of all, that state could potentially. So today blockchains are not very scalable, but tomorrow they already, they actually, they're improving very rapidly. If you're, if you're following Matic, if you're following Polygon, and if you're, if you're looking at what Solana is doing, like, you can do a lot more on chain in 2021 than you could in 2020. It's, it's kind of like bandwidth. It just improves every year. So more applications will become feasible like search indexes. Moreover, blockchains. Actually. So just to your specific point about search indexing, blockchains actually radically simplify search index to such a point. They're a dark horse competitor to Google. What I mean by that is Google index the open web because open web is open. And then social networks were like a dark web, you know, to them where that's why they were so mad. Google was so mad it couldn't acquire Facebook. Right? Because it couldn't index. It couldn't index Twitter. It had two deals with them. That's all on their, you know, on their server. So the social web is even harder to index than the open web. But block explorer blockchains and you know, block explorers, which are like search engines on top of them. Blockchains are easier to index than either the open web or the social web. And the reason is many of the problems associated with indexing just go away. For example, just one small problem, as you're probably aware, when you're indexing the open web, let's say you've got a million websites, you're crawling each one of them, you only have, you only have a certain bandwidth amount, total. So you have to figure out, okay, do I recrawl this site or this one, which one is going to freshen? Okay, does this update every day or not? So you have to run all these statistical estimators just to figure out when to crawl a site. All that goes away. For example, in the context of a blockchain where you just subscribe and you get a block of transactions.

Everybody's got the real time index and they can. There's no advantage being Google and having to serve on Freeberg.

We got a wrap.

Yeah.

For bestie Chamath, David Sachs Friedberg and our bestie Balaji. Thanks for coming on the pod and we will see you all next time on the all in the podcast. Bye bye. Let your winners ride Rain Man David Sachs.

And it said we open source it to the fans and they've just gone crazy with it.

Love you at night and Queen of.

Quinoa besties are gone.

That is my dog taking a notice in your driveway.

Oh man, my should all just get a room and just have one big huge orgy because they're all just useless.

It's like this like sexual tension. If they just need to to release.

Them out.

We need to get murder.