Marc Andreessen on His Intellectual Journey the Past Ten Years
In this Upstream interview, Erik Torenberg talks with Marc Andreessen about the intellectual and political shift he experienced beginning around 2012‑2015, which he traces through a self‑directed reading program of left‑ and right‑wing history. Andreessen describes a series of societal inflection points – Trump’s rise, Charlottesville, George Floyd, and Jan 6 – that shattered his prior assumptions about how people behave in politics. He explores whether ideas drive mass movements or whether popular sentiment drives ideas, concluding that large‑scale opinion shifts are primarily emotional and non‑rational, with intellectuals later constructing narratives to rationalise them. The conversation references classic thinkers such as Nietzsche (master vs. slave morality), James Burnham (The Managerial Revolution, Suicide of the West), and Erik Hoffer (The True Believer), using them to explain the emergence of a managerial class that runs modern corporations and governments, creating a principal‑agent problem and a self‑reinforcing oligarchy. Andreessen argues that the current elite is a managerial oligarchy that perpetuates its own power by recruiting high‑achieving individuals into its circles (Davos, Aspen, etc.), a process he calls the “circulation of elites.” He contrasts this with a “bourgeois capitalism” model exemplified by founders who retain ownership and control, citing Elon Musk’s takeover of Twitter as a modern experiment in restoring owner‑run firms. The discussion also touches on effective altruism and strategic philanthropy, critiquing the abstract, long‑term utilitarian calculations that can lead to “playing God” social engineering. Throughout, Andreessen emphasizes the historical cyclicality of political systems (Machiavelli’s rule of one, few, many) and warns that without a superior elite with better ideas, moral narratives, and institutional structures, attempts to replace the current oligarchic order risk mass death. He suggests that a “better elite” would need superior ideas, a compelling political myth, prestige mechanisms, funding, education, and media control to sustainably replace the existing power structure.
Chapters
What you need is, if you want to replace the elite that you have today, what you need to do is you need to have a better elite. There's basically only one way out if you don't like the current oligarchic elite that doesn't result in just mass death. The only way out is a superior elite. Okay, what would be a superior elite to the elite that we have today? Well, a bunch of things. One is they would presumably have a set of ideas that would be better ideas because that would presumably be the whole point of doing this. They would then need a story that is a superior story. It's sometimes called a political myth, which is they would need a moral claim that was able to legitimate their rule. They would need fashion, status, prestige. If you belong to our elite, you are a higher status, higher prestige person than if you belong to that elite. And then they would need to build all these other things, the perpetuation method, the recruitment method, they would need funding. They would need an education system. They would need media organs. They would need the ability to get their message out. For people who want to change the system, that is the way to do it. Now, it's been done before and it could be done again.
I'm Erik Torenberg and this is Upstream with Erik Torenberg.
Welcome to the first episode of Upstream.
Today's guest is Marc Andreessen. The story of Marc's entrepreneurial investor journey has been told in many podcasts. So in this podcast, we explore Marc's political and intellectual journey, his education.
In the mid-2010s, everything started to change.
So Marc reexamined his understanding of how the world works through reading the history of the left and the right. In this episode, we talked about what changed in the 2010s, what Mark learned from reading the history of the left and the right, and what that means for where everything is going. We talk about how our modern elites function, how and why they all have the same opinions, and advice for counter-elites looking to replace them. This was recorded a couple months ago when SBF and the Elon Twitter Files saga were at their peak, but the content is timeless. You could replace SBF with AI doomers and it would sound like it just came out. Without further ado, here's Marc.
Marc, welcome to the show. Thanks for being the first guest.
Hey, awesome. Hey, Erik, great to be here.
Great.
You recently tweeted about how 2015 shook your concept of how the world works, and you tweeted about a reading journey that you went on to understand What had changed. So we're going to get into some of those books that you read. But first, I want to summarize so that the audience understands what exactly changed. Is a fair summary something like that some of our major institutions, whether it was schools, media, government institutions, Fortune 500, kind of all went hard left in unison and kind of indoctrinating a new morality? And censoring people who disagreed. Is that a fair summary or what would be your edit or summary of what really changed? Because this is before Trump, right? What really changed in 2015?
Yeah. So the hardest thing with this kind of question always is, how much does the world change versus how much do you change? And so you always kind of wonder, it's like, okay, if I were the person I was today and I relived 1980 again or 1996 again or 2008 again or whatever, would I have a totally different view on things? And I think that's an individual question. It's also very interesting. It's a societal question because we live in a specific kind of media environment today. I often wonder what would it have been like to live through the Bay of Pigs or the Cuban Missile Crisis or Iran-Contra or the FDR administration or whatever, or World War II. Imagine living through World War II with modern social media and the level of second-guessing that would've taken place every step of the way. Would the United States have ever entered World War II in an era of social media? If you read the history of World War II, a very large percentage of the country was opposed to entering World War II up through the late '30s, basically up until Pearl Harbor. Would we have ever gotten involved? I don't know. Anyway, it's really hard to reconstruct these things historically. My lived experience, as the kids say, is that things started changing pretty dramatically from at least the way I understood how the world worked, probably in 2012. Just a lot of people in authority started saying things that just didn't make any sense to me. And people started acting in ways that I certainly didn't predict and didn't think would happen. And then, look, I think that I lived the same sequence of events as everybody else, but I think Trump winning the— I think there have been basically 4 big events. It's Trump winning the nomination in 2015 and then winning the general election in 2016. And then there was Charlottesville, And then there was the George Floyd moment, and then there was January 6th. There was like 3, 4, 5, 6 things in there that kind of caused, I think, both sides of the political spectrum, both halves of the American population to really start to act in really fundamentally different ways than at least I was used to. And so anyway, basically I lost all faith in my own ability to understand what was going on and just realized that basically all of my assumptions around how people behave, at least in politics and current events and social dynamics, basically are just wrong. And so when people react to that sort of soul-shattering moment in different ways, I suppose, my approach to deal with it is to try to then kind of go back and kind of trace the ideas back and try to figure out kind of where I went wrong. And that led me on this journey that you're referring to, that basically I— the way I do that is I basically read my way back and I sort of read my way back in time and try to figure out when things actually started. And then that led me to kind of do that. So there's a big historical kind of aspect of that. And then it also caused me to kind of— I basically decided that I didn't understand either the left or the right. I didn't understand how Democrats were acting. I didn't understand how Republicans were acting. And so I decided to kind of read my way out in both directions, both all the way out to the left, all the way to Lenin and Marx and communism on the one hand, and then all the way out to the right on the other hand, and see if I could at least reconstruct a worldview for at least some sense of context for what's happening today.
I heard there was this kind of critique of the left, which is, hey, you can read your way back, but actually it's really just excuses for people want stuff. And, you know, we have this debate with Richard Hanania about, hey, you know, how much do ideas matter versus just groups of people and tribalism? And of course, the left and right changes their ideas over time too. What's your reaction and take on that?
A couple kind of things in there. There's a big overall kind of question of theory of mind, which is how well does the right ever understand the left? How well does the left ever understand the right? There is some evidence, if you read political science, that people on the right tend to understand people on the left better than vice versa. The theory there basically is that a lot of right-wing people used to be left-wing people.
Yeah.
People tend to move right as they go through their lives. And so you maybe have a memory— like a lot of neoconservatives were former Marxists, as an example. And so they actually fully understood Marxism inside out. We'll talk about James Burnham, who's a classic example of this, who actually was a very active Marxist in the '20s and '30s, communist. So anyway, there's always kind of that question. The question of whether ideas matter, This is one of the things I've been trying to figure out and understand, which is you've got— a lot of this happened around Trump, which is you've kind of got 2 things that seem to run in parallel and seem to affect each other, but it's not clear which is the dog and which is the tail. So one is these sort of big mass movements of basically broad-based popular opinion. And I don't know if you've noticed this, but when broad-based popular opinion moves, it's usually not the result of some sort of detailed intellectual argument.
No.
It's not that you have 300 million people who read a journal article, an academic journal article, and then decide to change their mind on things. It's basically like it's an emotional surge of some form. It's a primal thing. It's not particularly logical or rational, but it's very deeply felt and very deeply believed. And by the way, maybe very real. And then there's this second channel, which is the intellectuals. And then there's the intellectual superstructure on top of the movement. For communism, that was obviously Marx and then Lenin, all of their writings. And then there's corresponding stuff on the right where people have written very important books over time. And then there's always this question, is it the intellectual elite basically driving the popular change because basically the population is responding to ideas? Or is it the other way around? It's like, no, the people move and then intellectuals are like, well, the people are moving, I am their leader, I must therefore get ahead of them. I must basically articulate a story. as to why they're moving so people down the road will think that it was I who caused it. Erik Hoffer talks about this, the sociologist, in his book The True Believer. He talks a lot about this. The True Believer is about this sort of mass movement of crowds. Hoffer's argument is an interesting one. Hoffer argues that basically the driver is mass popular sentiment, that mass popular sentiment moves kind of as a beast in and of itself. He uses the term the true believer to kind of refer to somebody who's become part of a crowd, part of a mob, part of a mass movement. On either side, by the way. This is true of communism, true of fascism, and so forth. So it's not a political observation, it's a psychological observation. And then what Hoffer says is basically whenever there's a big surge in popular movement, there's always sort of the evolution or development of a set of intellectual ideas on top of that that basically serve to describe what's happened and sort of rationalize it and try to put it into an intellectual framework. And he said the reason you get those ideas The reason that happens is because the movement needs to recruit the intellectuals. And to recruit the intellectuals, you need to have ideas. And so you've got this thin layer of intellectual content on the top that serves to recruit the intellectuals to the movement. And then you've got the demagoguery and the mass movement underneath that's sort of non-rational and more emotional. Maybe that's the case. I think Richard, if he were here, would probably agree with this. Richard's general take, as I understand it, is that basically people respond to interests more than ideas. And so if people in in the crowd think that they're going to be better off as a result of action X, or if their enemies are going to suffer because of action X, that's a direct incentive and they respond to that. And the ideas are kind of these abstractions that intellectuals just kind of chase their tails on. Maybe that's the best explanation. Having said that, look, Marx wrote these things. Marx wrote Das Kapital and the Communist Manifesto and so forth, and he wrote those 150 years ago, and China still uses them today. Xi Jinping still talks about them all the time. Xi Jinping presumably at this stage wouldn't have to talk about that stuff if it wasn't important, and yet he does. And boy, it certainly seems like Marx had a big impact on the world. And by the way, those same materials are taught in university colleges and universities today, and it would seem like they're having a pretty big impact on the world. And so that's a pretty strong argument that they're a driver. So truth probably somewhere in the middle.
Totally.
Yeah, oppressor and oppressed language still lives on today for sure. So you read a few dozen books about understanding the left, understanding the right. What sort of mental model on either side kind of filled in the gap or helped you get a better sense for either what's happened or what's likely to happen in either movement?
Yeah, so I mean, look, I'm hardly an expert on this, but I'll just kind of give my kind of composite sense and maybe set people down a road they can think about for themselves. I think if you go far back enough in history, basically everybody was super right-wing as compared to today. And I used to joke that it's just sort of like different things. If you go back 2,500 years, everybody was super right-wing compared to today. To the Greeks. If you go back to the Romans, if you go back to Florence in the 1500s, it was super right-wing. By the way, if you go back to 2015, it was super right-wing as compared to today. And in fact, there are things that 2 weeks ago, would strike us as super right-wing. Generally speaking, everything in the past was much more further to the right than it is today. Basically, why is that? Why is that is because the long-run foundation of human civilization has been hierarchy and order. And if you go back to any previous society, they all have some conception of natural order. They all have some conception of rulers and ruled. They have some conception of aristocracy and proletariat or so forth. And hierarchy and order are sort of inherently right-wing ideas. And then if you believe that, then basically the left is a reaction to the right. So the right is the original thing and then the left sort of emerged over time in a reaction to it. And starting with maybe Judaism and Christianity and then sort of flowing forward into liberal democracy and then ultimately socialism and communism, there's sort of All these sort of left-wing movements over the last 2,000 years have this sort of critique, and it's a critique of the right, and it's a critique of hierarchy. It's a critique of unfairness. It's a critique of some people have more than other people. Some people have more power than other people. Some people have more money than other people, and that there's an unfairness to that. And there's some altruism instinct in the human spirit that doesn't like that. And so as a consequence, the left basically says the existing order, the existing hierarchy is unfair. And so therefore we are going to tear it down and replace it with something that's more egalitarian, something that has more fair outcomes. Christianity did that from a morality standpoint. And then socialism basically attempted to do that from an economic standpoint. And we kind of live in the shadow maybe of those 2 great movements.
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And there's a certain kind of person who says, hey, yes, this movement starting in 2015, let's say it's gone too far, but it has good intentions and there's been some good things that have come from it. And it's an important kind of— it's an important direction and history has a direction and you want to be on the right side of history. Is the counter to that that good intentions have led to some horrible things or that it doesn't even help the people it aims to help? Because that's a very common position, let's say, even in tech, right?
Yeah, so there's a bunch of things. One is, there's a cliché for a reason, which is that the road to hell is paved with good intentions. And this again is a reading of history thing. If you read accounts of even really horrible people in history, they I think they thought they were doing the right thing.
Yeah.
Another cliché that I'll use a lot is everybody's the hero of their own story. And so I have a worldview, and psychologists will tell you this, everybody's really good at manufacturing an internal narrative for why they're the good guy and everybody else is the bad guy. And so I have an internal narrative that says I'm doing the right thing for my people. I'm doing the right thing for all of humanity. I mean, you see it playing out today in the FTX thing. I say I'm doing the right thing for the future of humanity. Right? It's the thing. These horrible people, they thought they were doing the right thing. In their framework of morality, inside their head as they understood it, their motivating force, their feeling, I think more often than not was they were doing the right thing. So clearly it's not enough for somebody to feel that way. Yeah, then there's the unintended side effects kind of aspect to it, which is it's really hard to establish cause and effect. I am going to change society in the following ways. It is going generate deterministically the good outcomes that I hope for, and it is not going to demonstrate the unintentional bad consequences that I would've been horrified about had I found out about them ahead of time. And just in general, a big problem with social engineering broadly is that it's very easy to both kind of blow it on the positive side and then also have a lot of negative consequences. And history's full of those. Look, and then maybe I take the question all the way back. So the picture that Nietzsche tells, the story that Nietzsche tells, I think is pretty pretty good on this. So the term Nietzsche uses for what we're talking about is sort of— Nietzsche says there are 2 kinds of morality fundamentally. There's sort of master morality and slave morality. And when he says that, he doesn't mean— there's a form of that that's literally morality of the masters, morality of the slaves. But when he uses those terms, he actually means the concept more broadly. He means the morality of the masters as taken by people who aren't even literal slave masters, but people generally who have inherited the morality of the master, even if they don't literally have slaves. And then similarly, he says slave morality is the morality of the slave carried forward by people who are no longer slaves.
Right.
And so he says the original form of order— and this is true, right? The original form of social order was masters and slaves. That is kind of how everything was structured. You go back 4,000 years, that's how everything worked. And so that sort of set this fundamental world battle in place. Master morality is very unnatural for those of us in a Judeo-Christian world because the Judeo-Christian world, according Nietzsche is the world of slave morality. Nietzsche asks us to sort of imagine that we lived in the pre-Christian times. We lived in a much more difficult world in which basic survival was at stake basically every day. What he basically says is in the pre-Christian world, morality basically was strong equals good. And so if you were strong, if you were in charge, if you won, If you were the victor, that was good. And if you were weak, if you were the slave, if you lost, if your people got destroyed, that was bad. And so that's the master-morality framework. We moderns don't accept that. We have a totally different view, which Nietzsche refers to as slave morality, which is basically, no, most people in life are not masters. If it's a choice between master and slave, most people are slaves. Historically, most people were slaves. And actually, the majority of people are slaves, they're abused by the masters, and we should be on the side of the slaves. And that is basically the Judeo-Christian ethic. We should be on the side of the weak, the downtrodden, the disadvantaged, the marginalized. You hear these exact same concepts playing out today. Look, if you object to living in the world that we live in and you're like, wow, I wish I could go back to the Roman Empire or go back to the Greek Empire or go back to the Egyptians or whatever, it's like, well, boy, life really sucked for most people then too. You definitely did not want to be a slave in Roman times. That was bad. And so it's hard to go all the way back to Roman times. At the same time, you do have to ask the question of, okay, do you want to live in a world of pure slave morality? Do you want to reach the point where basically all you're venerating is weakness? Where basically all you're doing is trying to achieve full equality of outcome, full egalitarianism, and you're trying to basically rank the weak all the way up the totem pole and rank the strong all the way down on the other end. Historically, that's where communism goes wrong. Communism is sort of slave morality fully realized as a system, and of course that leads to catastrophe. And so I think you kind of want to say that the truth is probably somewhere in the middle. You probably want some blend. You probably want basically on the one hand respect for merit and achievement and success, but you also want some sense of fairness and sharing. On the other hand, maybe the right way to have a society is to balance those two. Do they balance? Are they in thermostatic equilibrium and do they swing back and forth but they come around to some sort of middle ground? Or do they go pathological and a society that tries to reclaim master morality ends up being the Nazis and a society that goes all the way to slave morality ends up being the Soviet Union and they aren't actually thermostatic and you actually have to make a choice at the end of the day which one is worse and you have to steer society in the other direction? I don't know the answer. I think the question is a very live question because there are a lot of forces at work, at least in the West right now, that want to push us much harder in the direction of slave morality. Generally that experiment ends poorly. We seem determined to repeat it.
Yeah, it's interesting.
If we're trying to reconcile the two, it seems that we have strong brake pedals or a strong immunity on the master morality side. hold back strong men, um, our ability to, you know, take care of them. Whereas we have less immunity on people kind of, um, you know, being manipulative on the, on the slave morality side to get what they want, because we do care about compassion and kindness, good intentions so, so much. And, um, you know, it's— you mentioned it's a live question. I mean, earlier today, um, Elon just tweeted that, you know, uh, wokeness is a, is a mind virus and it's the, it's the most important problem. Obviously, we can't speak for Elon, but if I was to parse that or steelman that, I would say it's almost this meta-problem by which you can't solve other problems if you have excess slave morality making our institutions dysfunctional, making us turn on each other, etc.
Yeah, it's like, can you ever be too fair? Can you ever be too fair? Can you ever be too nice? Can you ever be too nice to the downtrodden? Can you ever be too determined to address injustice, is that possible? And a lot of people would say, no, you can't. You can always do more. You can always be more fair. You can always have more equality. Again, that was the story of the communists. That was the proposition of communism in the economic realm. And we saw how that ended. By the way, I just asked, I've just been running experiments with ChatGPT, the OpenAI thing, the chatbot. And it actually does. It actually gives a pretty fair-up description. You ask it about fascism and it actually does kind of a really good description of fascism and kind of notes that it doesn't end well.
Yeah.
And then you ask it to describe communism and it does this very interesting thing where it describes communism and then it says, now in fairness, communism has been implemented to varying levels of success. It's like, well, hmm, okay. And of course what that's reflecting is nobody OpenAI decided that that would be the answer. What happened was OpenAI is trained on the corpus of written human knowledge and generally speaking, a lot of people who've written about politics over the last 100 years have been a little bit soft on communism and that kind of reflects its way through the training data. You mentioned the Elon thing. I'd abstract that out a little bit. The book that had the biggest impact for this question on me this question of, can you have a morality of compassion and redressing injustice and achieving equality? Let's call it egalitarianism as an ethic. Whether it's religious in the form of Christianity or whether it's economic in the form of progressivism, does that always become pathological? The strong argument that that becomes pathological is James Burnham, who we'll talk about probably a fair amount. But James Burnham wrote 3, I think, really important books. The 3rd book he wrote, which has a very aggressive title called Suicide of the West, which kind of gives away his answer, is basically a full undressing of liberalism and progressivism, used sort of as pseudonyms or synonyms. And he makes a strong argument. He wrote the book in 1964. He wrote the book having been such a committed communist in the '20s and '30s that he actually was a personal friend of Leon Trotsky and worked with Trotsky for years and argued with Trotsky at great length for a very long time. So he's a guy who definitely knew the left and knew communism and socialism really well. And he wrote this book in '64 when he was the chair of the NYU philosophy department, which it's basically inconceivable that a character like this would be in a position like that anymore. But he was at the time. And of course he wrote the book in '64, which is right before the big social upheavals of the 1960s that resulted in the world we live in today. And what he basically said in the book was he said actually the left has a fatal flaw. And the fatal flaw, exactly to your point, the fatal flaw is no governor. There's no limiter on how much compassion you can have. There's no limiter to how much you can try to achieve equality. There's no limiter to how much you can try to overthrow hierarchy and order and get to full egalitarianism. And so he basically says in the book, as a consequence, liberalism will always become progressivism, progressivism will always become socialism, socialism will always become communism, and you will always end up basically in pursuit of utopia. You will always create hell on earth. The 20th century, I don't know what it was, like 80 societies or whatever over the course of the 20th century tried different versions of communism and kind of all got the same result, notwithstanding OpenAI or ChatGPT. The counterargument, the steel man counterargument would be, look, most European economies today and the American system are left-wing in a lot of ways from a historical standpoint, but we're not in fact the Soviet Union. It's not full communism. And so at least since he read the book, that hasn't literally played out in the West. There are people in national office who definitely seem to have that vision. So I would say the jury's still out.
If Eric Weinstein or Sam Harris or Yasha Mounk were here, they would say, hey, no, post-World War II we had this golden era of liberalism where we were able to keep things in check. And we just need to get back to that. And if Peter Thiel were here, he would say that's like the communists saying real liberalism, real communism has never been tried. And it's a pipe dream. Is that time period an anomaly or how do we make sense of it? Why is going back a pipe dream? Or is it?
Well, I think any modern leftist would say that was also the era of peak racism, sexism, homophobia. That was the Mad Men era. And so that was the an era in which basically white men were running around doing whatever they wanted and women were oppressed and gay people were oppressed and Black people were oppressed and all these things. So I always find it interesting whenever anybody on the left argues that we should go back to the 1950s, 1960s, because that does not seem to be a prevailing view on the left. Then there's the economic explanation of the American ascendance in the second half of the 20th century. And I think the economic explanation is very simple, which is World War II. Every other industrialized society on the face of the planet was bombed into rubble in World War II, either because they started a war that they shouldn't have, like the Germans, or because they were on the receiving end of it, like the Brits and the French and the Japanese as well. And so these societies got— Germany just got very nearly physically obliterated. Japan, not only did we set off nukes in Japan, we firebombed all the cities and burned them to the ground. There really was very little industrial capacity in the West as of circa 1945. Now, Germany and Japan and other countries rebuilt and started doing really well again in the 1970s, 1980s, but it was a 30, 40-year journey to get those countries really back up on their feet as modern industrial economies. And so the US, we had a— all of us trained in tech are trained to never use the word monopoly, but instead we just say robust market share. The US had a robust market share of global manufacturing, I think in large part because there just were not alternatives at the time. And so we had very high rates of economic growth during that period. We had very high rates of productivity growth. Growth covers up a lot of sins. Maybe we got away with a lot of dysfunction because we were just growing so fast economically. Yeah, I don't know. Nobody really— I mean, you mentioned a handful of people who might pine for the '50s and '60s. I mean, almost nobody does, right? They either pine for the '30s They want to go back to the full New Deal, or they pine for an even earlier era. People on the right will sometimes pine for an earlier era of free enterprise. The heyday of free enterprise in America was probably something like 1870 to 1929, probably. So 1870s, 1880s through the 1920s. It was what's called now the Second Industrial Revolution. So it was the sort of incredibly transformative time in technology with the creation of everything, electric power and all modern communication networks, telegraph, telephone, radio, television, automobiles, airplanes. And so it was this incredibly fertile time in terms of technological development. And then it was pre-New Deal, which means the national economic system was much more laissez-faire. And this is sort of the fully realized kind of heyday of classical liberalism in its full glory. Free market libertarians would like to go back to that era. Most modern Americans would not.
Yeah. Maybe you'd want to go back to the '90s or something. We're having a lot of social progress, but still free speech is popular and there's a question as to whether you can take the good without the excess.
Well, then there's the other kicker on that exact kind of argument, which is, yeah, but the '90s got The '90s got you everything that followed the '90s. So if everything was so great in the '90s, why did everything go so wrong in the 2000s and 2010s? It's the same question. We might go further back. If everything was so great in the '50s and '60s, why did you get the '70s and '80s?
Yeah.
And look, the glory of America is its dynamism. We change as a society and culture way more than most. And so that's the strength. But every preceding historical period apparently was on very shaky footing because it didn't last very No. And in fact, it was not very long until there were lots and lots of people who thought it actually, in retrospect, whatever happened 20 years earlier was very deeply evil. And so whatever preconditions created whatever golden age you want to hold out there, they didn't last. And in fact, they presumably sparked reactions and changes that led to the worst environment we're in today. So I think it's hard to find stable ground. And because it's hard to find stable ground, it's also hard to have that much faith in the so-called static model. Because what a lot of people will say is, oh, fine and good, and there's these constant arguments and right-left and this and that and interventionist and isolationist, and there's all these kinds of poles, nationalist and globalist and so forth. There's all these kind of different axes of politics and social change, merit/equality of opportunity versus equality of outcome and so forth. So you can kind of imagine a graph that has all these different axes, and then basically the pendulum kind of swings all around the graph but always comes back to the center somehow. It's like, well, maybe, or maybe what we're just talking about is massive survivorship bias. 100 other societies in the last 200 years went badly off track in horrible ways. We're the one that didn't. The dice came up in the right order for us. Congratulations. Great. We won at the roulette table 30 times in a row. The 31st spin of the dial's coming up. Or it's, what's it in Nassim Taleb? It's the guy who drowns in the— how do you drown in a lake that is on average 4 feet deep? Well, it's because if most of the lake is 3.95 feet deep and then there's one part that's 100 feet deep and you get stuck in that part, you're in real trouble. And so maybe we're always about to wander into that trench and fall out of view and die. I don't know. I think it's a really big, important question. I think people can get too blasé about where things go because I don't— and again, the sweep of history, right? It's just like there are so many societies that thought they had things figured out and then everything went horribly wrong. I think it's hard to just assume that everything will be okay just because it has been so Yeah.
You mentioned Burnham. Let's get into Burnham. You mentioned The Suicide of the West. Let's talk about his other book, The Managerial Revolution, because it's related to what's happening right now. There's been this kind of underground idea for a while. I think Eric Weinstein calls it the gated institution complex or something like that. Some people call it the cathedral. It's the idea that the government, academia, media, Some corporations work together in a decentralized way to achieve a certain political goal. So how do we make sense of this?
Burnham has 2 books that bear directly on this that provide at least an explanation that's made a lot of sense to me. Since I read these books, I feel like I understand the 2 examples you're talking about, why they play out the way that they do, and see if this resonates with people. The first book is called The Managerial Revolution and it was written in 1940. It's actually interesting because it was written A couple things historically about it. One is it was written shortly after Burnham had been an actual communist, and so he was trying to actually still work his way out of communism at that point. It was also written at the height of World War II, and it was actually written when it actually wasn't clear who was going to win. And so there's a bunch of sections in the book that are like, well, if America wins, X, and if Germany wins, boy, that'll mean a totally different set of things. So it's a good kind of recreation of what it must have been like when the answer to that actually was not clear. But his thesis in the book basically is as follows. Basically what he says is, look, world systems like governments and industries and human affairs, basically up through the 19th century, were basically small scale. By my understanding, they were small scale. Population levels were low, states were small, and businesses were small. And even if you had a car company or whatever, it just wasn't that big. When Henry Ford had Ford Motor Company, it didn't make that many cars. There weren't that many people who could afford cars. And so you sort of had this world of preceding forms of social order, which was monarchies or aristocracies or bourgeois capitalism, free market capitalism or whatever, where basically there was always a principal in charge. So the king is in charge, or Henry Ford, the owner of the company, is in charge. The idea of a business as a sole proprietorship, the owner of the corner store owns the corner store, the owner of the car company owns the car runs the car company. So basically in all of human history you had people in charge, Taleb would say people with skin in the game, people who had direct responsibility, authority, and accountability all wrapped up in one. And then what Burnham says is in the 20th century, as a result of the Second Industrial Revolution, the 20th century is a century of scale. And so all of a sudden the countries get really big, the populations get really big, the companies get really big, the industries get really big, the technologies get really complicated, And he wrote right at the beginning of computerization, which of course was going to accelerate all these trends. And what he said basically is the era of just a Henry Ford running his car company is basically over. And he said instead what happens is all big companies are going to get run not by the owner of the company, but by a professional class of managers. And the literal form of that is literally people who have gone to management school and gotten MBAs. More broadly in his definition, it's basically people with advanced technical skills, sort of technical managerial skills, people who are administrators who are capable of running large institutions. And so he says basically all the companies are going to get run by these managers, all governments are going to get run by managers. And this was the heyday, he saw this happening because this was the heyday of the New Deal. FDR enormously expanded the scope of the federal government, for better or for worse, and then brought in this new class of person to kind of run the federal government, which which were Burnham's managers. And then Burnham said, look, World War II is this 3-way fight basically between the 3 big political systems of the 20th century, which basically is fascism in the form of Germany and Italy and Japan, communism in the form of the Soviet Union, which was our ally even though Stalin, you think, was actually kind of a bad guy, and then liberal democracy in its full flowering and its progressive form under FDR. And he said basically those 3 systems obviously have big differences, but they have One big thing in common: they're they're all managerial in nature, right? The the communists, the Soviet central planners are going to run the entire country from Moscow. The you know Nazi central planners are going to run you know the entire country, the entire economy, you know from from the you know from Berlin. And then in the U.S. you know FDR is going to run America, right? With his with his managers. And but but but the kicker he put in this he said, "Look, this is not either you know you could say this is good or bad. It doesn't it doesn't even matter if it's good or bad." He says it's necessary. He says the reality is all these systems are too big to be run by you know the older. Model of the Henry Ford, the owner or whatever. These systems are all gigantic. They are all gigantic. All countries from here on out are going to be huge. All industries are going to be complicated. All businesses are going to be complicated. And so it's going to be a world of managers from here on out. And then he basically identifies what today we would call the principal-agent problem. Which is basically what this means is, and you see this with companies, which is basically if the owner of the company is not running the company, Then there's a separation of ownership and control, a separation of ownership and management. And then you're going to have basically the creation of what he called the managerial class, which will be the people who are basically going to be actually running the company. And then as a consequence of this, ownership will tend to then get dispersed and ownership will become very weak. And that's what's happening. Think of any public company today. How many owners are there? Take any of these companies. Take General Motors. How many owners of General Motors are there?
None.
There are millions of owners of General Motors because there are millions of people who own General Motors stock. How many managers are there at General Motors? There's the top 10 executives that run the company. There's a CEO, the top 10 executives, the top 200 managers in that company run the company. Who's more in charge of General Motors, the owners or the managers? And the answer is clearly the managers. By the way, same thing politically. Who runs the United States government? Is it the voters or is it Congress and the White House? us. The voters are dispersed. There's whatever, 300 million of us. We're dispersed. We individually, none of us have any influence or control at all. And so the handful of people who are our representatives basically run everything. And this leads to incredibly weird results where Congress polls at like 10% overall, but like 90% of us like our congressperson. You get these paradoxical kind of side effects of this. Anyway, so the creationist managerial class. And then basically what he says, he doesn't use this term I don't think, But the result is basically the principal-agent problem becomes dominant in everything. And so it doesn't matter how well-intentioned people are, whatever. It's like the principal-agent problem is right. The principal who owns something delegates running it to somebody else. Those people have very different interests. And if your principals, your owners, are dispersed and your managers are concentrated, then the managers are going to end up with all the power. And that's basically what's happened. Let me pause there and We'll keep going on this thread.
One thing I want to follow up real quick on that thread is this question of a decade ago or a period of time ago, Republicans bought sneakers too, so to speak. These elites who control these institutions catered to both sides and they maybe had a bit more political or intellectual diversity within them. But something happened where First off, you could also be apolitical. There was a certain time, but politics kind of infested every area of life. And now it's less about catering to both sides and more about catering to one specific side. And so I'm curious what changed there.
Yeah. So what Burnham would say, 2 things. So the first, to build on managerialism, what Burnham would say basically is the managers get to decide the politics of the company because they can. Because the managers have all the control, even though they don't own the company, because they have all the control, if they decide they want to take the company in one political direction and against another political direction, they can just do that because who's going to stop them?
Right.
Principal-agent problem. If you polled all the owners and said, do you want the company to do this? The owners would probably say no, this is a bad idea because to your point, we're going to cut off half the market. We're going to sell less sneakers as a result. The managers are like, I don't care. Why would the managers care? They don't care. The owners can't remove them. The owners are too dispersed. And so basically the managers can get away with essentially exploiting the position that they've been put For their own ideological or political ends, and they can just get away with it and they can just do it because they can do it. And then the company example of this is very interesting because what you actually have— the problem is even worse than we've been describing, right? Because the problem is you have the principal-agent problem playing out at the level of the management of the company. You have the exact same problem playing out at the level of the actual ownership of the company in the sense of the big money management firms, and in particular the big index funds, the BlackRock and its competitors. And so what you have with the Fortune 500 today, just structurally, is you have generally these woke left-wing management teams basically exploiting the principal-agent problem to their benefit. And then you've got these woke progressive investment firms that are aggregating up huge amounts of money from millions of dispersed shareholders and then It's actually really funny because it's like these index firms, their entire business is predicated on the idea that they do not have the competence to pick which companies to invest in. And so therefore they're going to take your money as a future retiree and they're going to invest it in the entire index of companies. But yet somehow the managers at the index firm are so enlightened that they're completely qualified to re-engineer society and to have a set of political views that may have nothing to do with your political views as an investor, but they are qualified to figure out how to re-engineer society. And this has led to ESG. ESG and all these other things. And so you've got basically these 2 actual classes of managers. You've got the corporate executives on the one hand and you've got the professional investors on the other hand who essentially have both basically just taken power from their dispersed owners just because they can. And I think that basically just continues as long as it continues. I don't know what stops that.
Well, maybe Elon stops that.
Yeah. Okay. So then there's the Elon thing, right? So basically, okay, so what we've he described a sort of— again, back to Burnham, who described capitalism post-1940 or something. What Burnham basically says is there are 2 kinds of capitalism. Everybody thinks it's the same. They're not. There's 2 very different kinds. There's what he called bourgeois capitalism, which was the Henry Ford kind, which is the owner of the company runs the company. That's sort of the classic. And then there's managerial capitalism, which is this thing where the principal-agent problem kicks in and managers run the company even against the wishes of the owners. I view what we do in Silicon Valley with startups, with venture— by the way, same for private equity also, we could talk about. Basically what venture capital and private equity are is they're sort of the return of bourgeois capitalism into an economic system that's almost entirely managerial. And the reason it makes sense to have venture capital and startups in Burnham's framework to bring back some level of bourgeois capitalism is basically that managerial capitalism, It has its advantages. Remember Bruno's point, it is necessary. You do need highly trained professional technical managers to run these giant enterprises. But it has its problems. We've identified one of the problems, which is this sort of political thing that happens. Another problem with managerial capitalism, I would argue, is it doesn't innovate very well. And it doesn't innovate— companies run by professional managers don't tend to innovate very well. Why don't they innovate very well? Well, the kinds of people who become professional managers are not innovators. innovators, because if they were, they wouldn't do that. They would be off inventing products and starting their own companies. And so basically the way I think about it is venture capital and private equity are sort of the older model of capitalism, that first model of bourgeois capitalism sort of coming back in the modern era and sort of harvesting this arbitrage opportunity that's created by the fact that the managerial companies can no longer invent new things. And so we do that every day. You've done that in your career. What do our companies all have in common? It's basically there's somebody, there's a person or a very small founding team of people who own on day one, 100% of the business. But even after they get it fully financed, they still own a lot of the business. They often actually have voting control of the business. And again, they have bundled accountability, responsibility, authority in the old model. If you brought Henry Ford back, if you were able to teleport Henry Ford into our era, he would look at a modern high-tech startup and he would say, that's just like Ford Motor Company was when I ran it. That's model. And then he would look at modern Ford Motor Company and say, holy Lord, I can't believe what happened. And Ford Motor Company may be a very well-run managerial company, but it's not run anywhere close to how Henry Ford would've run it. So anyway, yeah, so that takes us to Elon. Of course, what Elon is, is he is the fully realized Henry Ford, Howard Hughes, one of these kind of peak bourgeois capitalists. He is the best example of this bourgeois capitalism model that we've had in our society for, I think, decades. And you see it playing out with Twitter. He's just like, I own it. It's like, I bought the entire company. I own it. I am completely in charge. I am going to completely harvest the payoff from my success if I make it work, and I'm going to lose all the money of my own money if it doesn't work. I am attaching my money to it. I'm attaching my reputation to it. I'm putting my time into it. I'm not delegating. There's no professional class of managers at Twitter. He's running the company himself. And so it's bringing back this old model and it's bringing him back into a world in which the companies he's competing with and many other companies generally just don't run like that anymore. So yeah, I think it's great. I think we should bring back as much bourgeois capitalism as we can. Now, Burnham would argue, fine, Marc, that's great, but you're just going to recreate the problem, right? Which is because you're going to birth all these companies, they're going to be run by the founders for a while, and then at some point, guess what? They're going to get big and complicated and the professional managers are going to take over and you're going to just recreate the problem. And I'm like, okay, my answer would be, okay, fine, but that's a problem for 20 years from now.
Better than we have now.
Yeah, let's do what we can for now.
I see Elon running a few experiments, more experiments in the past past few weeks have been started than maybe in the past few years. Some of them include Elon showing that you as a company owner, you don't have to be bullied or pressured by activists within your company. You can actually fight back and maybe win. And that is showing a model to CEOs of what's possible. I think he's presenting a model of you don't have to be externally bullied either. I think we had an era in You know, you could look at companies like Uber or other companies that kind of didn't necessarily apologize, or I guess they did apologize and kind of conceded the moral high ground. Whereas Elon is fighting back on moral terms, actually saying, no, we are more pure than the people who are attacking us and winning to some extent. I also think he's presenting a model of institutional reform, whereas there's been this idea that these institutions that have been captured You can't reform them. You just have to start new ones. And maybe the situation is so bad actually that if you fight, you kind of empower the winners anyways and you have to, let's just wait until it's a better time to push back. And Elon's not waiting, obviously. And so we're going to learn so much from these experiments.
Yeah. So I won't talk too much about Twitter specifically because we're involved in it and I shouldn't. But yeah, no, I think, look, he is doing all that. And by the way, he's done all that in 45 Yeah. And again, this is the thing. I don't know if you ever probably have these— it's like the parlor game thing, which is like, what would you do if you owned Company X? And it's always this hypothetical kind of parlor game thing. It's always a form of question I always ask because I'm trying to get to what substantively is the right thing to be done. In Elon's case, he's just like, screw it. I am literally actually going to own it and then I'm actually going to do all those things. And look, there's a lot— I'd say this. Every other CEO who's at least conscious in the industry is watching Elon very carefully right now. I just got an investor relations readout from a company that I won't name, but I bring it up because it's a readout of feedback from their investors. It's a public company, and so it's feedback from their investors. And there's a section in the readout, and this is just a reflection of what their investors are saying to them. It's a section of the readout called the Elon Effect. And it's exactly what you'd think. It's like, okay, this guy seems to be able to run this company on 20% of the headcount. And so basically, what are you going to do? And again, the significance here is that data's a little bit stale now. So that was probably 30 days in that they had those meetings where somebody said the Elon Effect. And so the shareholders are all watching. And so yeah, a lot of people are watching. I think honestly, at least in private conversations, a A lot of both CEOs and investors I talk to are very much hoping that everything plays out great because they're hoping that he's presenting a new playbook for how to run these companies.
Totally.
And again, what Vernon would say is, congratulations, you have rediscovered the virtues of bourgeois capitalism. Yes, this is how things used to work. This is a way that it can be done. It does rely on having somebody actually having that level of power who is in that level of control. And look, he's dealing with all the different constituents he's dealing with, but at least he's not arguing with BlackRock. There's a whole set of people he normally would have to deal with, that CEOs normally have to deal with, who he just doesn't have to deal with because he literally owns the company. And so yeah, look, maybe it's a model. Maybe if this works the way that he clearly intends it to work, Maybe a lot more people literally do what he's doing, which is, to your point, they buy these companies and reboot them and reform them. And that would be a big change. And then maybe just on the margin, maybe this changes how public companies are run. Maybe this is a little bit of the reinvention, maybe this is a little bit of the rediscovery of this. If we bring back some of the spirit of bourgeois capitalism while still retaining some of the advantages of managerialism. Aspirationally, you could say maybe that's a Yeah.
Well, it's interesting. I remember Stripe laid off 13% of its workforce. Stripe is a credible company, of course. And then a number of companies followed suit with exactly the same amount of their workforce. So it's just, you need one example and then others follow.
13%. This is not cracking on Stripe, just the general trend that I've observed. Yeah. So it's always this funny thing. It's like 13%. Why is it 13%? Well, because it feels like it should be at least 10%. But boy, 15% sounds painful. But we do want to show that we're serious and we want to meet in the middle. And so it's probably going to be either 12% or 13%. And 12% might sound a little weak, so let's do 13%. Whereas Elon's like, yeah, 80%. The difference in magnitude between 13% to 80%, there's a spread.
Yes. I know it all too well, unfortunately. Moving away from Twitter, but still on Elon for a second because he also presents a new model for how to be a billionaire. A common question we'll get is, over the past decade, during some of the most excesses of what's been going on, people say, where have the billionaires been? Why haven't they stepped up to stop it? And as it turns out, maybe some of them have been implicitly or explicitly supporting it. And it feels like there's this kind of monoculture for how billionaires are supposed And the views they're supposed to have and the work they're supposed to do and the way their organizations are supposed to set up and what they're supposed to do. These are your peer set. Talk a little bit, even in the abstract, about kind of the pressures that face this class and why Elon or maybe someone like Thiel is just so different from how this group all acts. Why isn't there more diversity among this class?
Yeah, so this goes to Bernays' 3rd book. So now we'll go to the 3rd book, which is The Machiavellians, which is probably the most important of the bunch. The Machiavellians is a book all about the structure of politics and society. It's not partisan. It's not really arguing right versus left. It's a structural argument. And we could maybe have a long discussion about this, but one of the key concepts that pops right out of The Machiavellians is this concept of oligarchy. Just to give a quick thumbnail sketch, basically what Burnham and his predecessors, the Machiavellians, he talks about a lot of prior political thinkers including Machiavelli but a bunch of others. And he basically says, look, there are fundamentally 3 forms of power. There are 3 forms of political power. There's rule of one, there's rule of the few, and then there's rule of the many. And then what Machiavelli said actually is there's a good and a bad version of both of those. And so the good version in Machiavelli's The rule of the one, the good form is monarchy, the bad form is tyranny. For rule of the few, the good form is aristocracy, the bad form is oligarchy. And then for rule of the many, the good form is democracy and the bad form is anarchy. And this is sort of a general framework for political systems. And then historically, if you read Machiavelli, historically political systems basically go through this rotation. They actually rotate through the 6. And then they go back to the beginning. So they start out with monarchies, the king goes bad, that becomes a tyranny, the king is overthrown by the aristocracy, the aristocracy basically goes to seed, becomes the oligarchy, the people ultimately decide they hate the oligarchy, they take over, they assert democracy, democracy doesn't work because the people can't rule because they're dispersed, that then turns into anarchy, and then therefore that's where you get a king. And so there's this sort of theory of this timeless cycle of politics that plays out. If you read this book and take it seriously, then you say, okay, what is our political system? What political system do we live under? And so you can run a process of elimination and you can say, well, it's clearly not rule of the one anymore because there's no more kings, right? So it's not monarchy or tyranny. Hopefully it's not anarchy. So that brings it down to aristocracy, oligarchy, or democracy. And then what you want to say is that it's democracy. What we've all been trained from childhood to say it as democracy, but of course, A, it's technically not democracy because it's representative democracy, which is not the same thing as democracy. So we're not voting on every single issue. We're electing 435 congresspeople and 100 senators and so forth and a single president to figure this stuff out for us. So it's representative democracy. So it's basically rule of the few. And then if it's rule of the few, is it aristocracy or oligarchy? And I think the short answer to that is it was aristocracy basically up through about the 1960s. '60s. And that was sort of the heyday of the WASP aristocracy and then these sort of super elite assimilated Catholic aristocrats, Jewish aristocrats, kind of with the dominant Protestant aristocratic class at the time that kind of ran the country. I mean, FDR himself was like a peak WASP aristocrat of his era. And then basically since the 1960s, the aristocracy basically for a variety of reasons either had power taken parameter just decided to give up power. And then our modern political form is oligarchy. And then there's this big difference between aristocracy and oligarchy. Aristocracy consists of what Machiavelli called lions, which are people who basically rule through force and assertion of command.
Master morality.
What's that?
Master morality.
Yeah, master morality. So the classical aristocratic rule is, why am I in charge? Because I'm in charge. I'm the aristocrat. I'm from the right family. I own the land. Screw you. Do what I tell you. What he calls the lion. And then the oligarchy, right, exactly. So the aristocrat is sort of representing the last vestiges of master morality. The oligarch who competes with the aristocrat basically says, oh, actually I'm ruling on behalf of the people. So he's what Machiavelli calls the foxes. And basically the foxes rule through deceit, manipulation, and cunning. And their form of deceit, manipulation, and cunning is to claim that they are acting on behalf of the people when of course they're actually acting primarily for themselves. because lo and behold, they are self-interested just like everybody else. And so anyway, Burnham and Machiavelli and Cicero and all these guys, Aristotle would say, we're living in a classic oligarchy. That's the actual structure that we're in. And so basically our ruling class is an oligarchy. It's an oligarchic elite. And elite here is a term out of this book as well. And then basically, so anyway, long-winded way of getting to your question, which is, okay, what happens to a high-tech founder regardless of background? Maybe they come from another country, maybe they come from here, maybe they've got I come from the rural Midwest and they start a tech company and it works and they become successful and they become rich and they become high status all of a sudden. What happens? And the question of what happens is they get invited into the oligarchy. And literally what happens is you start getting invitations. And so you get invited to Davos and you get invited to Aspen and you get invited to Nantucket and you get invited to— and before you know it, you are spending your time with— and by the way, you show up to these things, you show up to the Aspen Institute for the time or whatever and you're just like, oh my God, I've arrived. There's Prince Harry. Yeah, there's Prince Harry and there's Mike Bloomberg and there's all these movie stars and TV stars and politicians and there's Cory Booker and there's Kamala Harris and it's just like, wow, I am in. I am in the in-crowd. And you're invited in. And by the way, they're as nice as can be. They're incredibly sweet. They're incredibly nice. They're so happy to see you. It's so great to have you there. And dinners are great and the parties are great and it's all just so fantastic. And then at some point they're like, well, we have this project that we're raising funding for. And you're like, oh wow, I would love to support your program to whatever reform, whatever school. And then all of a sudden you find yourself writing the checks and then it's like, well, actually I'm running for president next year and boy, I'd love to. And you're like, wow, you're my friend. I'd love to support you. This is all great. And so what is it? It's a social circle, right? It's a political network. It's a patronage network. It's a fundraising network. It's a PR campaign. It's a governance structure. These are the people who staff the senior positions at all the big important institutions in the country. University presidents and people who run media companies and editors of newspapers. As they say, the boldface names. When they're written about in the newspaper, their names are in bold because everybody knows who they are. And it's just like, wow, I'm in. And if you're not paying attention to it, what you realize is what you're not getting in that group is you're not getting some broad representation of different political views and different walks of life. What you're getting is basically this abstracted elite oligarchic class where it actually turns out their politics are all just identical. They all believe exactly the same set of things. If they have arguments about anything, it's only on the margin. And primarily it's an influence operation. There's a lot of what's called logrolling. I support you, you support me. And by the way, it's distributed. There's no central node. There's nobody in charge. There's no wizard behind the curtain. There's no secret boss who's organizing the whole thing. These are literally conferences with 400 people where somehow they all end up thinking the same thing.
Yeah.
Burnham describes this process in the book and the technical term for it is called the circulation of elites. If you read the Machiavellians, what you learn basically is because of the political structure stuff I was talking about, any modern society is going to be oligarchy basically. That oligarchy is going to have a ruling elite at the top. The only way that that oligarchic elite can ever be displaced is with another elite taking its place, for reasons we could talk about. Populism is a total dead end. It would have to be replaced by a different category of elite. And then basically it's like, okay, if you were a self-optimizing oligarchic elite collective, how would you make sure that no new elite gets formed, the way that you would do that is you would recruit all of the new high-capacity, high-merit, high-achieving people who rise up in the system. You would make sure to recruit them into your elite. Which is exactly the process. You would invite them in and then they become one of you. Anyway, that's literally what happens. That's what happened. And by the way, I've been to all these places, I've been to all these conferences, I know all these people and it's great. It's just an incredibly exciting adventure. It's like the culmination of your life's work that you're in this network. It's all great as long as that's the political system that you think should rule the country for the next 100 years, as long as these are the people who should be in charge, as long as you agree with all their policies, it's all absolutely fantastic. And this is the irony of it, is most people who become billionaires in our society or become very successful in business, they're super contrarian. So they've got 1,000 different— every entrepreneur we know who's been highly successful, they're these super disagreeable people that have got all these really contrary ideas on how to run companies and how to do things, which is why they're successful entrepreneurs. But they get pulled into this world and all of a sudden they become incredibly conformist and they no longer have any unique opinions on anything involving politics or social policy or the structure of society or anything. They just adopt this sort of oligarchic elite view wholesale, with exceptions. And then basically to your question, what happens is every once in a while you get an exception. You get somebody who's basically like, look, I could go do that. I could be part of that. The guy I think who actually unlocked this in our era is actually not originally Elon, surprisingly. I actually think it was Larry Page.
Hmm.
I don't know if you recall, this is like a decade ago now. There was all this pressure at the time. There was the Billionaire Pledge. Buffett and Gates, who are charter members of this oligarchic elite that we're talking about, they created this Billionaire Pledge, which again is another form of this elite assimilation thing to try to get everybody to sign up for the whole program. program. And they're always trying to get Larry Page to sign it. Larry's like, look, he's like, I don't think that I should, I don't think the right thing to do with all the money that I have from Google is to just give it away. Because who knows these nonprofits, who knows what they do? He's like, I think what I should do is if I get hit by a truck, I think my money should just go to Elon Musk and he should just build a company, you know, build more companies. Right? If you remember at the time, the reporters are all just like completely horrified because like, oh my God, that's not, you're not on the program. Like, how can you not be on the program? Like, everybody knows what to do. Why don't you know what to do?
Right.
And Larry's like, well, I just think that Elon building companies is having a bigger impact the world than the Ford Foundation, as contrarian an idea as that was at the time. Larry actually hung that out there. And then to your point, Elon's been living it. Peter lives it. And the fact that there's Elon and Peter and Larry and others who are a little bit more off the beaten path now on some of these things, I think is opening up the aperture for the next generation. Yeah.
A few observations. First, what's interesting is that it's not like there's a new elite and an old elite and it's a generational divide as much because SBF is 30 years old and yet he's a Davos elite, as Davos as they come perhaps.
Full on. Sam went from Stanford math kid to MIT math kid to full charter member of the oligarchic elite that rules the world in 3 years. I mean, it was incredible. By the way, apparently he's still in it because they all keep defending him.
Yeah, well, let's actually talk about that for a second. Effective altruism. Your wife is in philanthropy and you guys talked about results-driven philanthropy. Who wouldn't be supportive of results-driven philanthropy? What's the blind spot of effective altruism?
Yeah, so my wife teaches, for people who don't know. My wife has taught for many years at Stanford. She taught philanthropy and she sort of helped develop, one of the main people who develop philanthropy as an academic field. She taught philanthropy at Stanford Business School, which she used to describe as sort of trying to divert the sharks out of the for-profit tank into the nonprofit tank. And her whole thrust was what she called strategic philanthropy, which basically you could think about it loosely as a grounded version of effective altruism. She's given talks and she wrote a book called Giving 2.0 where she talks about this if you want to it. But what she says is, look, there's a critique of philanthropy that she believes that, by the way, Sam would also agree with, which is basically most philanthropy is emotional. I or somebody I love goes through a health scare, I then donate money for that particular condition. Or I go on a trip, I go to Hawaii or something and I discover the plight of the dolphins and I start to donate money to that because it tugs at my heartstrings. Or I see a TV commercial and there's some poor thing, some poor person, and da da da da da, I So most philanthropy is emotional and then you get this massive reallocation of resources. Let's assume everybody here has pure intent, they're trying to make the world better. In medical research, for example, there are certain conditions that just get dramatically overfunded and there are certain other conditions that are even more serious that get dramatically underfunded just because of who happens to get what condition. The classic example is actually the age effect in medical research. So the stuff that old people suffer from gets much more funding than the stuff that young people suffer from. And of course the reason is because young people who suffer from something don't have any money to donate yet. Whereas when you're old and you get sick and you maybe have some money, then you make your decision based on that. So anyway, my wife basically says, look, you should evaluate philanthropic gifts the same way you evaluate business investments. You should think hard in terms of the actual effect that things are going to have and you should try to quantify it and so forth. And so, and look, we've done that in our private philanthropy. So as an example, one of our big pushes for years now has been Stanford Hospital, and in particular the ER department at Stanford Hospital. And a big reason for that is just any given day I want to basically understand what impact our philanthropy is having, I can go sit in the waiting room at Stanford ER and I can see the patients come in and I can see them get treated. It's a very tactical, tangible, practical kind of deterministic thing. So there's Effective altruism basically takes that idea and then scales it way up and basically says, okay, you should apply that same attitude and that same methodology to basically all of humanity. And you should basically fully implement the philosophy of utilitarianism, which is to say the greater good. And you should basically be able to mathematically model and you should say, okay, if I do XYZ today, then it's going to have this impact, not just next year or 5 years from now, but 10 years from now, 50 years from now, 100 100 years from now. By the way, maybe the entire future of civilization. Maybe I'm going to make an investment today that's going to result in humanity reaching the stars or humanity curing all diseases or humanity achieving whatever desired result 100 years from now. The critique of that has always been the same as the critique of utilitarianism, which is you get into a level of abstraction where you basically start to play God and you start to think that you can put things in a spreadsheet that extrapolate out 100 years in the future with huge numbers variables, you start to think that you can re-engineer society. You start to think that you can kind of play this really big game. Will you ever actually be able to prove any of your assertions? Will you ever actually see the results of your work? Will there ever be a feedback loop back to what you're doing so that you can correct? Probably not, because you're now dealing at a level of abstraction and time horizon that's just way beyond any individual human's ability to do anything. And so anyway, this is my critique of it. It leads you into this playing God social engineering thing. And Of course, if you ask, well, what kinds of political movements support playing God and doing social engineering, I think we'd agree on the answers. And so it leads you down this kind of ideological path that has a shocking number of overlaps to other ideological paths that have ended very badly for reasons we've discussed already.
Makes sense.
And there's an interpretation, I don't know if it's true, but one of the famous Sam Bankman-Fried interviews was an interview with Tyler Cowen, where Tyler asked him, because they're talking about all this stuff, the math involved in effective altruism and utilitarianism and probabilities and so forth. And Tyler's like, suppose you could roll the dice and with 51% odds you would get another Earth. You would literally get another Earth with another 8 billion people and an entire ecosystem and you'd Basically, you double the footprint of humanity in the cosmos, but with 49% probability you would lose the one Earth that you have. And do you roll the dice? And Sam's like, oh, of course. Because the expected value, expected value, you're more— and then of course Tyler's next question is, do you roll the dice more than once? Suppose you win the first time, it comes up heads and you get your 2 earths and you then get to make the same bet again, double or nothing. And in Sam's argument, you keep actually making that argument over and over again because if you get it right 10 times in a row, then you've got 1,000 earths and that would be so much better than what we have today. How could you not take that chance? Anyway, one of the theories about what happened at FTX was he applied that philosophy to running a financial services firm.
He kept rolling the dice.
He kept rolling the dice and the dice came up positive a bunch of times in a row and it got him into this incredible position. And so he just kept rolling the dice. And so there's a theory that basically what he was fundamentally doing was trying to optimize the future of all humanity by trying to roll the dice so that he would end up with a trillion dollars so that he would end up being able to solve all the problems. Now, there's an issue with that theory, which is he gave that interview to the reporter from Vox where he basically said, yeah, I was lying about all the things I thought.
It's a dumb game woke Westerners play to make people like us.
Exactly. So he undermined his own defense there a little bit, but Who knows?
Yeah.
I mean, again, another couple observations. One is Elon is acting as a lion, to use the language you mentioned, but he's a meritocratic lion. Not a, you know, I rule because I'm the best, not because of my family. And what's interesting, you know, Bobos in Paradise, Dave Brooks' book, chronicles how we moved from an aristocratic elite to a meritocratic elite, but that same meritocratic elite also became most critical of meritocracy itself. And maybe as a way to deflect or maybe just reconcile this idea that, hey, there are inherited advantages. We don't actually have equality of opportunity. Anyways, that's one interesting observation. The other observation I'll mention is We mentioned how these billionaires who've been so successful, so contrarian in their private company lives, when it comes to the Davos elite, they have a lot of weird views, a lot of weird views about how people should live in their personal lives, but then also kind of this global government kind of ethos. And I'm curious how you kind of reconcile, you know, you're a fan of immigration, you're a fan of trade, you're a fan of globally connected world, but you don't want global governance. What is sort of the right framing of thinking about that?
So a bunch of big questions in there. So let's start with, remind me the first thing.
The meritocratic elite that denies meritocracy.
Let's talk about that for a bit. So there's this guy, you can kind of trace this progression. So there's this guy James Conant, C-O-N-A-N-T. And so he was an American WASP elite out of casting. He's a very important figure in 20th century American history. He was a chemist by background and actually worked on chemical weapons in World War I as one of these really advanced science guys. And then famously in the early 20th century, for a long time, he was the president of Harvard. Which then and now, Harvard was the highest status educational institution in the country. Harvard and a couple other places give us all the Supreme Court justices and typically all the presidents and so forth. And so Conant ran Harvard. And actually at Harvard, I bring him up because he did exactly what you're describing. He came out of a system of actually inherited aristocracy, which was kind of the traditional American WASP aristocracy. And he was very explicit about this. He used Harvard as a vehicle to basically replace the inherited aristocracy with basically an aristocracy of merit or an oligarchy of merit, which we'll come to, but sort of a class of merit. And he's the guy who basically opened up admissions at Harvard and he basically says, it's not going to be all legacies and all people with the right last name and all people with families in the social register and their families came over in the Mayflower and all that stuff. It's going to be the best and the brightest. And we're going to basically scour the country and we're going to basically go find the best and the brightest and we're going to recruit them in. And then we're going to basically have this aristocratic elite class of merit. And he actually did that, by the way. He did that. By the way, as a consequence of that, every other university basically did that. That led to the creation of, for example, the SAT, the ACT, merit testing emerged out of that. And so the goal literally was to go scour the country every year, get the smartest kids from wherever they happen to be and bring them in. And by the way, again, circulation of elites. Invite them in. Congratulations. It doesn't matter where you came from. Now you're at Harvard. Now you're a Harvard graduate. Now you're in the Harvard network. We're going to jump you up to this ability where you can have this giant impact on the world, but you're here because of merit. Funny thing happened. It did not result in equal representation by group. They ran this process for 20 or 30 years and let's just say there were some disparities. There were some population groups that were extremely unhappy and there were some other population groups that wanted to speak for the previous population groups and assert their moral superiority and say that these are bad outcomes. He came under increasingly intense criticism later in his career and by the 1960s he was basically canceled for saying bad things because he made comments at the time on race that basically even in the 1960s would get you canceled. I bring him up because his career basically spanned all 3 phases. It spanned the original, basically inherited concept of aristocracy when he started, and he was a product of that himself. He then implemented and essentially co-created the idea of an aristocracy of merit and fully implemented it. And then he ended his career basically on the other side, which was the birth of the modern system. The modern system of civil rights, affirmative action, and modern university admissions. It's all coming full circle because the Harvard case is now in front of the Supreme Court. It seems like the Supreme Court is highly likely to use the Harvard case to strike down affirmative action in university admissions, which if they do that, would be return Harvard back to where it was when James Conant was running it in the 1930s, 1940s. Probably that's not what would actually happen. Anyway, this is all still a giant live issue. Anyway, so he lived all 3 phases of this and all 3 phases of this actually played out quite quickly. It all played out in the span of one man's career. So this is a little bit of the thing that you and I were talking about earlier, which is like, okay, if there was this moment, let's say there was this moment when James Conant was running Harvard and let's say it's probably 1940 is a good midpoint for this or something where They truly were admitting purely on the basis of merit. And again, you could have many different criticisms as to whether they were different advantages and all that stuff you could talk about, but let's just say they were doing it straight on the basis of SAT scores. And so it doesn't matter where you grew up, it doesn't matter whatever ethnic background, immigration status, none of that, gender, none of that matters. It's just how do you score on the SAT? They actually did that for a while, and then that became, for whatever set of reasons, good or bad, that became untenable starting in the 1960s. And they have been basically evolving in a very different direction ever since. So apparently, at least in our culture, in our era, that's not actually a stable state. For people who would like that to be how these things work, sorry, Harvard's not going to do it.
Yeah.
So if anybody's going to do that, it's going to be some sort of new institution. It's going to have to be somebody else. Anyway, I don't even mean to actually reach a conclusion based on that. It's just that you can actually see this whole thing playing out and I I actually think the kind of flow of events as people argue this stuff out, these situations have unfolded often enough now where you can see the pattern and kind of predict where they go.
Yeah. And it's really interesting. I mean, people like Michael Shellenberger, people like Thomas Sowell, there are a number of people who've shown that there's a certain set of policies that the foxes promote that actually don't don't help the people that they're aiming to help. And they recommend alternative policies, but those alternative policies kind of break a fundamental assumption that all people are equal or some fundamental assumption that people are uncomfortable with. And so they would rather keep the fundamental assumption that they think respects people's dignity or something than get maybe the outcomes that they want. And it feels like that fundamental This assumption is so core to so many things.
This goes to also the same question earlier, which is sometimes this oligarchic elite seems to end up with these somewhat crazy ideas like, you will own nothing and be happy, or, you will eat bugs.
Yes, exactly.
You'll eat bugs, you will sleep in the pod. Again, what Burnham would say here is very straightforward, which is this oligarchic elite has become a very disconnected disconnected class. So it's become a very disconnected set of people. It's a very small set of people. There are a whole bunch of things. First of all, they are actually often very high merit. They often actually are quite smart. It's not that they're dumb. They have been educated at a relatively small number of institutions. Generally, you see a very high correlation to a certain small number of Ivy League universities and their international equivalents. They associate primarily with each other. Part of what you get when you join the oligarchic elite is you get a set of friends and your new set of friends are much cooler than your old set of friends. And so they associate with each other. They kind of by definition don't invite people in who don't fit. And so if you show up and you're like, wow, I really like that Tucker Carlson character, isn't he great? You don't get invited to Aspen next year. So they kind of box out— this is even before they classified all oppositional speech as hate speech and misinformation. Even before that, it was like, look, you're going to have a certain set of points of view here if you want to fit in. It's a social dynamic. a social club. Like any social club, people are expected to kind of all agree on things and to not really argue about things and certainly not do anything that would offend or horrify anybody. And so it's like the opposite. It's like, what's the joke? It's a marketplace of idea.
Yeah.
There's no real dispute that happens. There's no truth-seeking exercise. It's like we're all going to basically agree on the same thing. And then they live in rarefied air and then a lot of them, they're either rich or they have a lot of rich friends. And so they tend to live behind high walls. They tend to be guarded by men with guns. They tend to not be subject to violent street crime. By the way, another irony, and Sol and others have pointed this out, the other irony is they actually follow very bourgeois traditional life scripts on average.
Yeah.
If they have kids, it's generally they're married. They're raising their kids in two-parent households. They have very stable family situations and they prize education. They teach their kids to work hard. They follow a very traditional, even aristocratic— by the way, mating, they have very strong opinions on who their kids should marry and reproduce with. One of the reasons why there's so much focus on getting kids into these top colleges is because that's the marriage pool. That's where the good people to marry are. So there's a reproductive kind of component to it. And so they live in this rarefied— it's like anything. It's like the courtiers at Versailles or something. They live in this rarefied simplified world. And so when something happens in the real world that is not as they predicted, again, they don't have skin in the game. They're not subject to the consequences. So let's just take a hypothetical example. If they decide that the correct social policy to achieve true equality is to let all the criminals out of jail, hypothetically, and the result is a massive surge in street crime that is victimizing huge numbers of poor and disadvantaged people, They're completely insulated from that. They have no risk. I won't name names, as tempting as it is, but I know people who are big funders of all of the pro-crime district attorneys and they really believe that they're going to heal the nation and heal the world and achieve racial harmony if they let all the criminals out of jail. And they are, in my view, responsible for just this massive violent crime wave that's happening right now. And then they literally have SEAL protecting them. So there's no crackhead homeless person who's going to come get past your SEAL Team 6 security guy. You're out. You're ruling a society but with no accountability whatsoever for the results. And so yeah, it's extremely easy. In fact, it would be shocking if people in those circumstances did not get radically disengaged and disconnected from reality. And again, if you go back to your Machiavelli, that's where it's like oligarchy at some point, the people are just like, you know what? Screw Screw this, screw these people. And at some point they show up with pitchforks and just kind of take care of the problem.
To finish the analogy around the tension between nationalism and globalism, in some ways this is supposed to be the era of the sovereign individual. And yet it seems like, as we saw during COVID governments are adopting some of those technological advancements to control its people in increasingly tightening ways. And it seems like this idea of global governance, global coordination to solve whether it's climate problems and nuclear proliferation or what's going to happen with AI, God forbid, it feels like that's becoming more and more vogue. And yet, for people who are, as you are, excited about trade, excited about immigration, excited about global coordination, how do you reconcile those tensions or say, hey, stop here?
Yeah, so there's this idea that you've alluded to that's very deeply seated and you could call it modern global governance as they sometimes call call it. If you go to the World Economic Forum, they'll teach you this. Or if you go to these parties, there's sort of this through line which basically says— and it actually, in a lot of ways, I mean, in some ways it's baked into Judeo-Christianity generally, but Hegel was the philosopher who kind of fully articulated this in sort of modern philosophic terms. And then his thinking was carried forward by Marx and others. And so the intellectual origin of this kind of through line of thinking is sort of in Hegel and his successors, which basically is like, look, the progress of human society is a progress. And by the way, this sounds great and there's certainly some truth to it. The sort of flow of history is basically confronting problems and solving problems. And so everything, life used to be nasty, brutish, and short, and everybody used to die of disease, and everybody was hungry, and da da da da da, everybody's slaves, all these problems. And then basically there's what they call the historical process, and the historical process plays out. And the way the historical process plays out is what Hegel called dialectic. And the dialectic basically is, you've got basically one theory for how things should work. Boy, they don't seem like they're working very well. You've got another theory on things you should do about it. You argue about that. And then you come up with a synthesis and you kind of get to the answer. And then basically you play out that answer. And by the way, if it works, that's great. If it doesn't work, you repeat the process until you figure out the answer. But at some point you figure out the answer. At some point, the right set of smart people, whether they're philosopher kings or democratic rulers or scientific experts, at some point they're going to run the experiments on how to optimize society such that they will ultimately at some point figure out the right answers. Now imagine that you ran that process for hundreds of years and you ultimately figured out the right set of answers. And maybe at one point you thought that that was Stalinism, maybe at one point you thought that whatever, whatever. But you've arrived at a point where it's like, okay, this is the end of history thing, Fukuyama, liberal democracy. We figured it out. We figured it out. We solved what the answer is. We have the playbook. have it. The Davos version of this is whatever global democracy thing that they have. If you really have all the answers, then you have the ultimate moral imperative to impose those answers on the entire world. Because of course you do, because you have all the answers. You can solve all the problems. If you had all the answers, let's suppose you had all the answers to how to organize society, how could you not impose those answers on the entire world? It's the only morally correct thing to do, because if you don't do it, all these poor people are going to be suffering in all these completely unnecessary ways. And so therefore, I have the answers, therefore I must oppose them. And so this is the intellectual foundation underneath communism. This was the story at the time. This is the story behind the current Chinese form of communism. This is a thing. This idea has had a big impact on history. And the strong forms of it are not doing as well right now, but the softer form of it, it's less of a hammer and a little bit more of a velvet fist or something. But this impulse is very strong and this is the impulse of the oligarchic elite. We have the answers. We have figured out the answers. And by the way, we just saw it playing out in COVID. The answers are super obvious. We're going to have lockdowns. We're going to have this. We're going to have that. And we are not open. We have already figured out. There's no more reason to discuss this. We have the answers. Anybody opposing us is clearly opposing us in bad faith because we are This is the thing where these guys will get up there and they'll say things like, to challenge me is to challenge science. I have the answers. Stop bothering me and just do what I say. And so anyway, this is a very deeply seated, deeply rooted thing. And by the way, these people fully believe that they're doing the right thing. In fact, it's necessary to prosecute this kind of campaign, which is like they're completely convinced that they have the answers, and if they don't impose them, they're actually committing a great moral crime by opposing them. Anyway, this is very deeply rooted in the system. And then yeah, look, people who oppose that, you know what they're called, right? They're called nationalists because they don't want the quote unquote global governance. They're called fascists because they don't want—
Yeah.
So you got all the kind of dirty words. Yoram Hazony wrote a book a couple years ago called The Virtues of Nationalism, which is a very provocative title in the current current environment. He was actually blocked from advertising the book on certain social media platforms because it sounded like it must be a fascist manifesto. Now, he's Israeli. It's a bit much to accuse him of being a Nazi, although people have. And so he makes this argument in the book that you'll enjoy. It's the kind of argument that never really works, but it is a fun argument to hear, which is he's like, actually, this Hegelian global governance world state kind of thing is Yeah. Right? Because he's like, look, the advantage of having many— the way Yasuni puts it is the advantage of having many countries is you have many different systems of organizing society, and then you are actually able— and you therefore have diversity of the forms of society. And so therefore you can actually have real-life experiments play out as to which things are better, which ones aren't. If everything is just globalist and everything is just a single global— ultimately a single global state, which is like the Hegelian and Marxian Marxist dream, you will eliminate all forms of diversity of social organization and philosophic ideas. And so basically you will not achieve utopia, you will achieve dystopia, because you will no longer have a process of evolutionary involvement of thinking. And so he says in the book, if you are pro-diversity, you should therefore be pro-nationalism. You should be pro the existence of many separate states. Of course, this argument does not work at all. Just because the same people who want universal world government also say they want diversity does not mean that they're going to buy his argument that you should therefore Just like they would make the argument that if you're pro-diversity, you should have political diversity as well. Exactly. Yes, we can definitely not hate anybody from a different kind of ethnic background, but we can definitely hate the people on the other side of the political aisle with the theory of a thousand suns and tell our kids that they are definitely not allowed to marry any of those people. Because that form of hate is just fine now. But anyway, I go through all that because to your question, that is a massive Massive underlying question underneath a lot of this, which is, do we want the entire world to run the same way? And if we really have all the answers, yes, we do. If we believe that it is actually impossible for anybody to have all the answers and that it actually is a very terrible assumption to ever believe that, and that reality is actually super messy and that people actually deserve the freedom to not only try to figure out a better way to live, but actually the freedom also to make mistakes, then this track that a lot of people are on is actually a very dystopian and leads to potentially hellish outcomes. Thomas Sowell, if he were on this, he would say, yeah, this was precisely the debate around communism. The same debate exists today, just under different names, and people are basically making the same mistakes they were making then.
Yeah.
Anyway, so what am I? I don't know. Somewhere in the middle. I'm a prime beneficiary of prime beneficiary of globalization. You and I work in a field in which there's no question our field is spectacularly enriched by the enormous amounts of immigration that have happened in the US over the last 50 years. I feel like I work with the United Nations every day. I work with people from all these different backgrounds. It's just absolutely spectacular. I would not want to live in a system that would somehow decide that was a bad idea and send them all back to wherever they— that would be horrible. That would be awful. Look, at the same time, do I think it's a good idea to have a single system of global governance where there's a set of experts that determine everything and everything is equal and everything is the same? No, that sounds like hell.
What if they're experts and fact-checkers?
Yes, the missing link is the fact-checkers because they can make sure the experts are on the straight and narrow.
Yeah, exactly. Checks and balances. Let's get into this counter-elite. We alluded to it earlier that populism is a bit of a dead end. We alluded to Peter Thiel in 2016 when he endorsed Trump was a bit of a pariah. And now there's been more of a movement around, there's been more diversity within tech. And it seems like this counter-elite is forming. Elon obviously is potentially accelerating it massively. And that's on a macro level, on the billionaire level. But then also on a micro level, a lot of tech people are kind of politically homeless. They don't want to be on either side. They don't want to be in the far left, policies that sound good but don't work, or dysfunction within organizations. organizations, but they don't want to be on the far right. They don't watch Fox News. They're pro-choice. They don't want to be Republicans. They don't want to be conservative. They want to be a centrist, but that won't hold for maybe reasons we've discussed. So on that level, but on the billionaire, play this out. The counter-elite, new moral, new philosophy among people who've been homeless, politically homeless.
Yeah. So I'm going to focus more on the structural aspect. I'm trying to be a little bit less on the partisan side, but on the structural So back to Burnham. I did the throwaway comment saying populism is a dead end. And so it's worth for a moment addressing why that's the case. Even if you think the current elite is terrible, let's even assume you're a full-on whatever, let's assume you fully believe the current elite is evil and they must be torn down and must be replaced by a true democracy. What Burnham would explain to you is that's not actually possible. And it's the exact same point that we discussed earlier on managed democracy. materialism. Or another version of it is what Burnham calls the iron law of oligarchy, which basically is in every human system, no matter— by the way, this also was true in communism, true in the Soviet Union communism, it's true in China today under communism. Every human system, there's always a minority of people ruling the majority of people. That's basically permanent. There's never actually democracy. It's always basically some minority ruling some majority. And you see this play out over thousands of years across many different kinds of societies. And the reason for that is mechanical. The argument has no bearing on how they rule. It's just that there will be an elite that rules. And it's a mechanical argument, and it's because the elite is concentrated, whereas the majority is dispersed. And so if you have 100 people who are highly concentrated and are organized up against 10,000 people who are a rabble and a mob and are just like a populace that's just out there doing their thing every day and they're just not organized. The organized elite is always going to end up in power over the disorganized masses. And this just happens over and over and over again. Again, the American system. Why do we not have a pure democracy? We do not have a pure democracy because our founding fathers were well aware that— I mean, just imagine the horror show that would result if citizens got to vote on every individual issue as it came up. Which, by the way, that's what happens in California.
Exactly.
California so screwed up now. We have direct democracy in California. It's obvious to everybody it doesn't work. Of course, we will continue it forever. But representative democracy is an expression of the fact that even in a system that was intended to be very egalitarian and very democratic, you're still going to have this organized elite in the form of literally Congress and the executive branch and the 9 justices of the Supreme Court who are fundamentally going to run the country on behalf of the people. So anyway, this is what's called the iron law of oligarchy. There will always be a small number of people in charge of a large number of people. That small number of people is referred to in this framework as the oligarchic elite. And again, we talked about it before, how do they rule? They rule by telling a story that legitimizes their rule. That story in our era is the story of egalitarianism. They are not ruling for themselves, they are ruling on behalf of the people. And they tell that story, they have policies that are intended to deliver on that, maybe a little bit in some ways, sometimes, maybe out in other ways. But that's the story that they tell. And then as a consequence of that, they are the elite, they set the narrative, they have the dominant part, they have the moral high ground in society. And then they have these reinforcement mechanisms. They have the credentialing system and they have their recruitment system to bring in, assimilate in the new people and so forth. And then think about what else they have. By the way, they don't necessarily have all the money, but they have power, and then they have the ability to perpetuate, and then they have the status high ground. So it's sort of status, prestige, fashion. These are the fancy people. These are the people that when they do things and they say things, people care. And so anyway, if you read Burnham, what he will tell you is basically if the people were to actually rise up— suppose that people woke up one day and literally took pitchforks and torches and went and stormed Davos Aspen and killed the oligarchic elite, the result would be anarchy. The result would be hell. It would just be a spiral into hell. It would be like Black Hawk Down territory of just madness and chaos. And so that's not a route. So what you need is, if you want to replace the elite that you have today, what you need to do is you need to have a better elite. There's basically only one way out if you don't like the current oligarchic elite that doesn't result in just mass death. The only way out is a So then you're in thought experiment territory, which is, okay, what would be a superior elite to the elite that we have today? Well, a bunch of things. One is they would presumably have a set of ideas that would be better ideas because that would presumably be the whole point of doing this. They would then need a story that is a superior story. It's sometimes called a political myth, which is they would need a moral claim that was able to achieve buy-in, that was able to to make their rule. They would need fashion, status, prestige. They would need legitimately to be able to project, if you belong to our elite, you are a higher status, higher prestige person than if you belong to that elite.
Yes.
And then they would need to build all these other things, the perpetuation method, the recruitment method, they would need funding, they would need an education system, they would need media organs, they would need the ability to get your message out. For people who want to change the system, that is the way to do it. So the good news is there's a roadmap. There's an answer to the question. There's a way to do this. It's been done before and it could be done again. Having said that, it's the world's biggest challenge because whatever you think of the current oligarchic elite, they are very powerful. They are very in charge. They have many resources. They are very cool people and they're not so easy to just simply replace.
To a smaller extent, Thiel has done this with the Thiel Fellowship. It's higher status in some circles or many circles than even getting into Harvard or Stanford. That's one example of an organ. If people are pursuing this in earnest, on the ideas and myth level, let's brainstorm if you're open to it. One track could be competence. As we saw during COVID etc., this past elite has been incompetent. And putting intentions aside, we're just a much more competent elite. We're going to focus on unifying instead of dividing. I'm just kind of riffing here, but what ideas and myths do you think are potentially compelling that a counter-elite could get behind, could advocate, and might resonate?
Yeah, so I think let's build on those 2 to start with. One is competence. Would you like your 8-year-old to be able to walk to school without getting mugged or assaulted? At some point there are some very basic competence questions. How did you feel about being locked up for 3 years? And you got COVID anyway? Oh, that's interesting. So I think there's that. And there's always this question of when do people finally get fed up? I mean, a city-level version of this was crime in New York City in the 1970s. And then at some point they did elect an anti-crime mayor and then at some point he did bring crime So this does play out at a micro level for sure. And so maybe there's some larger version of it. Now again, a couple things on that. It'd have to be real, right? Because if you didn't deliver, people would get very upset. The same thing would happen to you. So it would have to be real. And then you'd have to be able to recruit. You have a chicken and egg problem. You'd have to be able to recruit in the people who are actually capable of executing on it before they're in power. The way to think about this is suppose you have an existing corrupt elite. Let's suppose hypothetically you have an existing corrupt, rotten, incompetent oligarchic elite and you have a new, fresh, competent, fired up meritocratic elite. And then put yourself in the shoes of an aggressive, ambitious young person right out of school who's on the make and wants to optimize their position in society and wants status and power. power and money. So you have to have a recruitment. Your story has to be really good and you have to have a critical mass, the ability to recruit those people, because otherwise the existing elite is just going to get constantly reinforced by having new people take it over and carry it forward. So that could be a really big one. What was your second one?
Oh, we're going to focus on unifying people instead of dividing them.
Unifying. That's a good example. Okay, so that's another thing. For example, you might observe hypothetically that current elite seems to be doing an awful lot of demonization of the other side. Interestingly, the other side is basically, arguably, in our modern politics, class and race demarcated. It's really funny. Our current oligarchic elite is heavily dominated by white people. And there's nothing more that they hate than poorer white people than them. And so you could argue they sell a story of division and the deplorables. And yeah, you could have more of a Julius Caesar kind of thing where you'd say, look, no, I'm not going to rule on behalf of 51% of the country versus 49%. I'm going to rule on behalf of the entire country. I'm going to invite everybody in and we're going to lift the whole thing. Now, you are denying people the ability then to hate, which is a huge attraction of the current system. So you're taking a big motivator away. You're replacing it with something that I think probably a lot of people would find more attractive. Yeah. And then part of it would have to be, look, these people have made you promises that they can't deliver. They've had time.
Yeah.
I mean, this is what you always kind of expect would happen in all these cities, right? Which is, it's like, okay, if the single-party governance of all these cities is going so well, why is the crime rate so high? At some point it's like, okay, they're not delivering. Yeah. So there's that. You'd have to challenge some sacred cows. You'd have to say, look, maybe we should not be trying to do the level of social engineering that's happening. Maybe it's a bad idea to have differential standards for different groups of people. What the Supreme Court's about to do in the Harvard case, maybe you'd have to revisit some of those things. Maybe people are ready for that. Maybe they're not. Yeah.
Yeah.
I mean, look, this is the big macro Historically, this is the biggest game of all. It's the creation of basically a new political story. It's the creation of a rationale to rule that actually results in the support necessary to actually get in the position where you actually are ruling. People have done it.
Recently you've been tweeting out a series of white pills, reasons to be excited. This is me projecting a little bit, but I feel I feel like the last few years for you and others have been a bit more pessimistic times. And so I'm curious for what's inspiring the recent optimism and wake-up calls. And maybe we can end with sort of the pessimistic case and the optimistic case. Some people have described the pessimistic case as like a very slow decay, 100 years Brazilification, I think some people call it.
And I'm curious for what the optimistic Yeah, I think the optimistic case, I mean, I kind of worded it negatively, but it's like one of my white pills is the current elite is actually really bad at specifically being an elite. Honestly, who really wants to look up to some of the— I mean, maybe some of these people people look up to, but some of them, it's just a hard sell. I mean, God, it's difficult. And by the way, again, this is not even a partisan comment. You just look at a lot of the national level people And it's just like, ooh, like I'm supposed to get excited about that person. That seems like a stretch. And then, you know, look, the results are like not great. Like, you know, you, you know, you can, like I said, you know, economic growth covers up a lot of, a lot of, a lot of sins. You know, the US economy, you know, generally works pretty well. Um, but, you know, you get in these situations like we've been in, you know, repeatedly for the last 20 years where you get in these weird, you know, foreign policy situations or these weird, um, you know, economic sort of downturns. You get these weird, you know, public health things or whatever. And you're just like, wow, like these people really They don't seem to— I mean, it's like COVID policy. I mean, look, COVID policy, right? Like, it's like, you know, 2 weeks to crush the curve, right? Okay, 2 weeks to crush the curve became 2 months, became 2 years, right? And nobody at any point, at least that I saw, ever like articulated, well, wait a minute, why did we ever think 2 weeks was ever going to do anything? Did we know that 2 weeks was like— did we do 2 weeks knowing it was going to fail and it was going to be 2 months? So did you lie to us or were you incompetent?
Yeah.
Right? And so just like every element of this, I mean, the mask thing alone, we could do like a whole podcast just on masks, the whole mask thing alone. It's like the exact same people who in February 2020 were saying there was no reason at all for any, you know, any normal civilian to ever be wearing a mask, you know, who, you know, within 2 months had it be basically the new, you know, holy face, you know, covering for all right-thinking people. Like, and then they were onto like, oh, maybe we should all double mask and triple mask. And then here we sit 3 years later and there are still, you know, schools that are forced masking their kids. Like, yeah, it's like, okay, like whatever this is, like whatever these people think they're doing, like it's not, and And then everybody gets COVID anyway. Apparently these people do not actually know what they're doing. They're not actually good at their jobs. There seems to be zero accountability. They seem to never get fired. It's like all these things. Afghanistan.
They say that we should forgive them.
Yeah, right. Because good intent sort of explains everything. But Afghanistan, whoever got fired for Afghanistan? 20 years of rule and leadership of the whole Afghanistan campaign. And we saw how it ended. And now the country's back and it's like we were never there. And this massive exercise and thousands of Americans dead and lots of other people dead and all this chaos and blood and the whole thing and stranded interpreters and the whole thing. And who got fired?
Yeah.
So anyway, Anyway, not to get specifically on these issues, but if they're going to be the elites, they got to be good at being elites. They got to at least be good at being elites. And at some point, if they're not even good at that, what are they actually good at?
Yeah.
And so at some point, I think people just kind of get fed up. And then look, the internet, it's become very fashionable, and of course nobody does this more than our current elites, but it's very fashionable to dump on the internet for creating division and dissension and this and misinformation and kind of on and on and on. And the people who tell that story the most forcefully are our current elites who just absolutely hate being challenged. And look, the internet is, as you well know, subject to constant censorship pressure at a level that would make Orwell blush. And notwithstanding that, information is still more widely available today than it was before the internet.
By far.
By far. And so even if the censors have had a good 8 years to do everything they can and information is still flowing. It's not flowing as free as I would like it to flow, but it's flowing a lot more free than it used to. I never want to get myself in a frame of mind that says the situation is hopeless. And I think there's at least cracks in the system that are encouraging.
To close, maybe that white pill relates to your tweet recently in terms of the theme of our era is uncashed checks suddenly popping up, absurd pretensions, wistful fantasies, and pretty ugly lies called Yeah, it's like, look, if you're in power and you've got this story and you can sell these propositions and you can implement these policies, at some point the results come in.
There's a longer conversation we could have about this another time, but just since the 1960s, 1970s, there were a set of policies put in place in the 1960s, 1970s that made very specific promises. And the results are in. We're 50 years later and not only did it not work, they were catastrophic in many ways. And so at some point the bill arrives. It does feel like an awful lot of bills are arriving. A lot of people are trying to cash a lot of these checks. We could have a long conversation about education, but even the Gates Foundation did this big report last year where they did a retrospective study of 40 years of philanthropic attempts to improve education in the US. And the result of the report is nothing worked.
Yeah.
40 years of promises, nothing worked. Per student budget of education in the US, K through 12, rose 3x over the last 40 years. in real dollars, results didn't budge. And so the data's there. The data's in. It doesn't work. The people running the system are terrible for all the reasons that people already understand. I mean, it's become so obvious now with some of the people in charge of these systems. And so yeah, the bill comes due. Now, it's like anything, people have to care about the results. They have to care about the results more than they care about the story. And it's always a question of, are It's always the thing, are people more enamored by their belief in the story and in their social affiliations based on the story than they are in the actual tangible reality on the other end? You mentioned Thomas Sowell. I'll just recommend for anybody who hasn't read his books, you want to definitely read all of Thomas Sowell's books because maybe more than anybody else in the last 50 years, what he does is he tackles all of these societal-level questions directly. And he does it from the position of very high level of moral authority, but then he's a world-class economist. And so he actually goes at the data and he addresses the data and he's just like, okay, this doesn't work. This doesn't work. This doesn't work. This doesn't work. And you come out the other end being like, oh my God, we're ruled by people who have no idea what they're doing. So it's a very— I find his books to be very inspiring. Other people might find them to be very depressing.
Let's wrap on that inspiring note. The bill is coming due. Mark, thank you so much for coming on the podcast.
Good. Awesome. Erik, great to be with you.
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